Publicly listed PT Charoen Pokphand, Indonesia's largest animal feed and processed chicken manufacturer, forecasts net profits to rise more than two fold this year on the back of more sales and higher selling prices.
Charoen vice president director Thomas Effendy said late Tuesday the company was upbeat that it would book Rp 450 billion (US$47.52 million) in net profits this year, up from Rp 187 billion last year.
"We are optimistic we will make this profit this year although our margin in the first semester was lower than in the same period last year," he said.
The Indonesian unit of Thailand giant Charoen Pokphand Foods may post a 38 percent jump in sales this year to more than Rp 12 trillion from Rp 8.7 trillion last year.
Thomas said the company had already secured Rp 6.2 trillion in sales during the first half of the year. Its net profit soared by more than two fold to Rp 209 billion from Rp 95 billion in the corresponding period last year.
Thomas said another factor that would boost Charoen's net profits was the higher prices for animal feed and for day-old chicks this year, as well as cost efficiency.
He said the company sold animal feed for Rp 2,900 per kilogram (kg) last year and Rp 3,900 per kilogram as of June this year.
"A day-old chick now sells for over Rp 3,000, compared to less than Rp 3,000 last year," he said.
Despite lower margins in the first semester of this year, the company had seen absolute growth in the amount of products sold.
"We sold 2 million tons of animal feed last year. We are estimating 2.3 million to 2.4 million tons for this year as our new plant in Makassar just started operations on Aug. 8," he said.
The new plant is one of the two new plants Charoen began to operate this year, besides the one in Lampung.
In total, the giant owns seven animal feed plants with a total production capacity of 4 million tons.
Besides those in Lampung and Makassar, the remaining plants are in Medan, Balaraja and Semarang with two in East Java.
With the two additional plants, Charoen aims to increase day-old chick production by 20 percent to 576 million chicks and processed chicken output by 50 percent to 42,000 tons this year, according to Thomas.
In 2007, the company bred 480 million chicks and produced 28,000 tons of processed chicken.
Thomas also said the company's net profit could be boosted even further, given the fact that the country's per capita consumption of chicken meat stood at only 5 to 6 kg annually, lower than the 30 kg in neighboring Malaysia and 8.5 to 9 kg in the Philippines.
In response to a draft bill on animal husbandry and animal health that prohibits a company to monopolize the upstream and downstream farming industry, Thomas believed there was currently no unfair competition in the sector.
He argued it would be more efficient for a company to set up an integrated poultry farming system, from upstream to downstream, as applied in developed countries.
