Bird’s the Word for Charoen as Profits Increase

By webadmin on 04:54 pm Aug 01, 2012
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Thomas Halusa

Charoen Pokphand Indonesia, a leading producer of poultry and poultry feedstock in the country, reported a 35 percent increase in profit through the first half of this year on rising sales.

Jakarta-based Charoen, a local unit of Thai conglomerate Charoen Pokphand Foods, said net income rose to Rp 1.69 trillion ($179 million) in the first half from Rp 1.25 trillion in the same period in 2011, the company said in a brief prospectus published in Bisnis Indonesia on Tuesday.

Revenue at the company increased 16 percent to Rp 10.2 trillion in the period.

Consumer goods companies like Charoen and Japfa Comfeed Indonesia are benefiting from strong consumer spending in the nation’s growing economy.

Brokerage company Kim Eng Securities in Jakarta said the rising price of chicken also helped Charoen through the first six months of this year.

“Higher net profit was supported by higher average chicken prices,” Kim Eng said in a report sent to clients in Jakarta. “Chicken prices increased 16 percent to Rp 16,966 per kilogram from a year earlier,” the report said.

At the start of this year, the Finance Ministry imposed a 5 percent import tariff on raw materials for animal feed, specifically corn.

This has allowed for an increase in chicken prices, which have been passed on to consumers to the benefit of poultry producers such as Charoen.

The company competes with rivals such as Japfa Comfeed. Japfa is one of the largest and most integrated agri-food companies in the country. Its core business activities include animal feed manufacturing, chicken breeding, poultry processing and aquaculture farming.

At Charoen, the price increases do not seem to have turned off customers. As Charoen’s earnings figures show, demand for meat products is increasing, a reflection of the changing tastes and increased disposable income of Indonesia’s growing middle class.

The government forecast the economy to expand by 6.5 percent this year, unchanged from its pace of growth in 2011. Private consumption accounts for two-thirds of the country’s $813 billion economy.

Shares of Charoen Pokphand rose 3.2 percent to Rp 3,200 on the Indonesia Stock Exchange on Tuesday.

Its stock has risen by 48 percent so far this year.

Shares of Japfa Comfeed rose 1.2 percent to Rp 4,350, taking their total gain to 14 percent this year.