Japfa net profit surges to US$130m for first nine months

INDUSTRIAL agri-food company Japfa's net profit for the first nine months of this year jumped to US$130 million - almost six times that of US$22.4 million a year ago - driven by strong momentum from its China dairy unit and swine business in Vietnam.

This comes despite a 2.5 per cent drop in revenue from a year ago to US$2.8 billion for nine months ended Sept 30, following dampened demand for poultry during Covid-19 in Indonesia.

Group operating profit still grew 28.4 per cent year-on-year to US$236.8 million, it said in a business update to the Singapore Exchange on Thursday.

However, revenue and profitability in its Indonesian unit, PT Japfa, were affected by a low-price environment. Purchasing power of middle- and low-income households have dropped during the Covid-19 pandemic, and consequently, the demand for consumer staples such as chicken. Revenue for PT Japfa decreased by 11.8 per cent to US$1.7 billion.

Since the Covid-19 outbreak, PT Japfa has frozen non-essential new capital expenditure in line with the financial discipline of the group, it said.

On the other hand, its dairy segment's revenue grew 13.8 per cent year on year to US$391 million, while the segment's operating profit grew 44 per cent to US$80.5 million thanks to higher raw milk prices due to a supply shortage in China.

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"We believe the supply shortage and the strong raw milk price environment will continue over the medium term as it takes time for the industry to build new dairy farms and reach the 'full milking' stage," it noted.

Beef operations in China also boosted revenue and profit after taxes by US$40.7 million and US$12.7 million, respectively.

Meanwhile, frozen and ambient consumer food products too drove higher revenue and profitability.

Revenue grew 2.3 per cent to US$146.5 million from a year ago, for the nine month period on the back of higher sales volumes. Operating profit stood at US$13.4 million, reversing from a loss of US$4.2 million in the year-ago period.

The agri-food company will also "forge ahead with growth plans" for its China dairy unit and Vietnam swine business, it said.

Earnings per share was 6.42 US cents, versus 1.21 cent a year ago.

Shares of Japfa closed up 0.5 Singapore cent, or 0.81 per cent, to S$0.625 on Thursday.