Japfa's profits plummeted 53% to US$7.81m in Q1

It blamed weaker operating profit from PT Japfa Tbk, which suffered from low broiler prices.

Agri-food company Japfa entered 2019 on a low note after profits crashed 53% YoY to US$7.81m in Q1 from US$16.68m in 2018, an announcement revealed. Revenue edged up 8% YoY from US$845.53m to US$911.24m.

The dismal performance was attributed to a dip in profitability from one of the group’s core business segments, PT Japfa Tbk, on the back of lower broiler average selling prices (ASP) as a consequence of lower-than-expected poultry demand. “This resulted in commercial farming operations recording a loss, which was more than offset by the strong profit generated in its breeding operations, a result of PT Japfa Tbk’s vertically-integrated poultry farming business model,” Japfa explained.

Meanwhile, revenue growth was due to higher sales from PT Japfa Tbk, Animal Protein Other (APO) and Dairy. The APO segment recorded an operating profit of US$10.5m in Q1 2019, from an operating loss of US$100,000 in Q1 2018, mainly due to the recovery of the swine market in Vietnam. This marks APO Vietnam’s fourth consecutive quarter of operating profit.

According to CEO Tan Yong Nang, the agri-food business will inevitably be subject to cyclicality, which is dependent on a variety of external factors that are beyond the group’s control.