Japfa Q1 earnings fall 64% to US$17.3m as costs surge

AGRI-FOOD company Japfa posted earnings of US$17.3 million for the first quarter ended March, down 64.3 per cent from earnings of US$48.5 million in the year-ago period.

The decline comes despite a 13 per cent increase in revenue to US$1.25 billion in Q1 on the back of higher sales volumes across all segments.

The company's chief executive officer Tan Yong Nang said: “Global high raw material prices, ongoing supply-chain issues and inflation are weighing on costs, while the Covid-19 pandemic is still impacting consumer demand in some of our markets, resulting in pressures on our profitability.”

Gross profit fell 28 per cent to US$200.4 million, as cost of sales outpaced the rise in revenue. Cost of sales climbed 27 per cent to US$1.05 billion during the quarter.

Operating profit slumped 45.7 per cent to US$81.4 million, with operating profit margin taking a 7.1 percentage point drop to 6.5 per cent.

Earnings per share fell to 0.85 US cents in the latest quarter, from 2.4 cents a year ago.

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“By being one of the most efficient and lowest-cost producers, Japfa is able to ride through major down-cycles,” Tan said. “As we have already demonstrated in the past, we can handle market challenges and cyclicality.”

Shares of Japfa closed S$0.005 or 0.8 per cent lower at S$0.615 on Thursday (Apr 28), before the announcement.