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October 12, 2021

Charoen Pokphand Foods to up stake in Hong Kong C.P. Pokphand

The Thailand-based food giant wants to become the majority shareholder in the livestock, aquafeed and packaged-food group.

Thailand-based food giant Charoen Pokphand Foods has set out plans to become the majority shareholder in C.P. Pokphand and delist the Hong Kong-listed business.

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The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
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Charoen Pokphand Foods (CP Foods) owns just short of 50% of C.P. Pokphand (CPP), which has operations across livestock, aquafeed and packaged foods.

Under the plans, announced to the Hong Kong Stock Exchange, CP Foods will buy more shares to take its stake in the business to 75%. Japanese conglomerate Itochu Corp. will continue to own the remaining 25%.

CP Foods is offering to pay HKD1.15 a share, which it says equates to a 27.78% premium to CPP’s average closing share price in the 30 days up to and including 24 September. That was the day trading in CPP’s shares was suspending pending news of CP Foods’ plan. The offer price would mean CP Foods lays out HKD6.99bn (US$898.3m).

In the stock-exchange filing, CP Foods said it was “important” Itochu remains a shareholder in CPP. CP Foods believes the Japanese group “can continue to contribute and share its management resources, global business network and technology platform” with CPP to help it become more competitive and grow in the long term.

CPP’s principal markets are China and Vietnam. The company’s businesses in China include poultry farming and packaged food. Last year, CPP merged its feed and swine food business in China with CP Foods’ own swine arm in the country. It now owns a minority stake in the business.

In Vietnam, CPP runs a feed operation, farms swine, poultry and shrimp, and sells packaged products including sausages and chicken meat.

Last month, the group issued a profit warning. It said its profits in the eight months to the end of August were, according to unaudited accounts, down 75% to US$112m. CPP pointed to a “deteriorated performance” of its food and poultry farm subsidiaries in China amid lower poultry prices.

The company said its now 35%-owned feed and swine farm business had been hit by lower swine prices. A fall in swine prices also weighed on CPP’s profits in Vietnam, it said.

In 2020, CPP generated revenue of US$4.33bn, up from $3.5bn a year earlier. Profit for the year from continuing operations – excluding the feed and swine food assets merged with CP Foods – stood at $752.4m, compared to $324.3m in 2019.

By contrast, the larger CP Foods booked revenue of THB589.71bn (US$17.69bn) in 2020, an 11% increase on 2019. Net profit grew 41% to THB26.02bn.

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img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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