Japfa returns to the black with US$51.7 million H1 net profit
The company also announces half-year Ebitda of US$247.3 million
JAPFA reported on Wednesday (Jul 31) a net profit of US$51.7 million for the first half of the year, returning to the black from a loss of US$53.6 million in the corresponding period the year before.
Revenue for the period was up 6.3 per cent to US$2.3 billion, from US$2.1 billion in H1 FY2023.
The agri-food company said that lower costs of raw materials led to higher feed margins, and poultry and swine selling prices rose amid cost-of-living pressures.
Additionally, the group’s poultry and swine operations in Vietnam posted lower production costs.
Tan Yong Nang, chief executive officer of Japfa, said: “In Vietnam, our well-established livestock genetic pyramid gives us a strong competitive advantage by providing a steady supply of livestock despite the challenges posed by the resurgence of African swine fever.”
Cost-reduction initiatives in Vietnam were effective and continued to produce results for the company, he added.
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However, African swine fever remains a challenge for the company’s operations in Vietnam.
A resurgence of the disease, which started in the fourth quarter of 2023, has reduced pork supply in the market.
On the demand side, persistent inflation in the country could continue to affect consumer purchasing power in the near term.
The company’s improved financial performance includes a 286.4 per cent year-on-year increase in earnings before interest, taxes, depreciation and amortisation (Ebitda).
For the half-year, Ebitda was US$247.3 million, from US$64 million in the same period the year before. It also posted an earnings per share of US$0.0254 for H1 FY2024.
Tan said that the improvement could be attributed to the performance of PT Japfa – the Indonesian subsidiary of the company – and the turnaround in operating profits for its animal protein (and) other (APO) segment in Vietnam.
Japfa’s Indonesian unit posted a 7.1 per cent year-on-year increase in revenue to US$1.7 billion in the first half of 2024, with higher feed margins, poultry prices and sales volumes.
Commercial farming for PT Japfa also returned to profit after losses over the past three years, the company noted.
The company did not recommend an interim dividend for the period and said that it plans to conserve cash for its operations.
Japfa noted that its operating environment has become more challenging since 2022. Weather conditions could affect crop production in some countries, and high interest rates increase the cost of funding.
Inflation is also weighing on consumers’ purchasing power, which would reduce the company’s ability to increase selling prices, especially in emerging Asia markets. This could result in a narrowing of overall margins, it added.
The mainboard-listed company expects animal protein consumption to grow in emerging markets over the medium and long-term, and is confident of sustained growth in the same time frame.
Shares of Japfa closed 2.9 per cent or S$0.01 lower at S$0.33 on Wednesday.
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