Charoen Pokphand Indonesia, a local unit of the Thai conglomerate, has set aside Rp 1.1 trillion — around $82.5 million — for capital expenditure this year to add production facilities and repair maintenance utilities. (Photo courtesy of Charoen Pokphand)

Charoen Pokphand Sets Aside Rp 1.1t for Capex, Acquires 7-Eleven

BY :SARAH YUNIARNI

MAY 23, 2017

Jakarta. Charoen Pokphand Indonesia, a local unit of the Thai conglomerate, has set aside Rp 1.1 trillion — around $82.5 million — for capital expenditure this year to add production facilities and repair maintenance utilities, the company's president director said on Tuesday (23/05).

Tiju added that the money to acquire 7-Eleven stores from publicly-listed Modern International — the current operator of the stores — is not included in the company's capex this year.

"We have spent around 20 percent from the capex and we are using our internal cash to fund it," Charoen Pokphand president director Tiju Thomas Effendy told reporters during the company's annual shareholders meeting in Jakarta on Monday.

Charoen's main business line is poultry feed — around 50 percent of the company's total revenue comes from it. Poultry farming or day-old-chicks production contributed 38 percent, processed chicken 8 percent and poultry farm equipment 4 percent.

"Corn is the main raw materials for our production," Tiju said, before adding that the company is planning to add a corn dryer machine — used to dry grains to prevent them from being spoiled during storage — in its facilities in Gorontalo and in Dongpu, West Nusa Tenggara.

Charoen said the new corn dryers will have a total capacity of 700 to 1,000 tons and also plan to build a new silo in Semarang, Central Java.

The animal feed producer has recently expanded its market to Papua New Guinea, sending one container there once every two months. The company's next move should be to expand to Japan, but no final decisions have been made.

Charoen is currently in the process of acquiring 7-Eleven stores in Indonesia and is waiting to sign a master franchise agreement with the Texas-based convenience retail chain — one of the world's largest.

"The deal will not take effect until we sign the [master franchise] agreement," Tiju added.

Charoen signed an initial Rp 1 trillion agreement to acquire 7-Eleven stores on April 19, with an understanding to complete the deal by June 30. Once it is completed, the company will be able to sell its processed food products — sold under the Fiesta brand — and beverage products at all 7-Eleven outlets.

The company booked Rp 12.01 trillion in net sales in the first three months of this year, a 30 percent increase compared to the same period last year.

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