Japfa's 9-month net profit down 12%

INDUSTRIAL agrifood company Japfa's nine-month net profit fell 12 per cent to US$113.9 million, despite a 32 per cent increase in profit after tax, as a greater portion of profits was attributed to minority interests.

This brought Japfa's earnings per share to 5.58 US cents from 6.42 US cents a year ago.

The company's revenue was 22 per cent higher at US$3.4 billion for the period ended Sep 30, 2021. All business units reported a rise in revenue, with Indonesian unit PT Japfa Tbk growing its revenue by 26.2 per cent to US$2.3 billion.

The increase came despite the significant drop in demand for poultry in Q3, after the second wave of Covid-19 in Indonesia having necessitated the closure of food stalls, restaurants and shopping malls.

Vietnam similarly faced a lockdown in July and August, dragging down demand and prices for swine and poultry.

The dairy segment recorded higher revenue and profitability on the back of high sales volume and prices of both raw milk and beef in China.

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The group's operating profit was 13 per cent higher. Japfa also recorded other gains of US$31.3 million, up from US$8.8 million the year before, and a US$20.2 million increase in fair value of biological assets, compared with a fall of US$2.4 million the year before.

Japfa chief Tan Yong Nang said the group is growing its dairy segment, AustAsia, into the largest independent raw milk producer in China by strategic partnerships with growing food and beverage Chinese companies as shareholders.

An aggregate stake of 12.5 per cent in AustAsia is being sold to Genki Forest, Honest Dairy and New Hope Dairy for a total consideration of US$146 million. The transactions with Genki Forest and Honest Dairy have closed, while the one with New Hope Dairy is pending.

Japfa acknowledged the unpredictability of the business, as Covid-19 could dampen demand in any market at any time and dent the selling prices of its products.

However, it believes it is well-placed to manage the situation due to its large scale, industrialised business model and its diversification strategy across proteins and markets.

Shares in Japfa ended trading at S$0.695 on Oct 28, down S$0.015 or 2.11 per cent.