Earnings of agri-food company Japfa was up 54.3% to US$118.5 million ($160.5 million) in 1HFY21 ended June, from US$76.8 million the year before thanks to stronger revenue growth.
This translates to earnings per share (EPS) of 5.82 US cents on a fully diluted basis, up 52% from the 3.82 US cents logged in 1HFY2020.
Revenue for the first six months of the year was up 23.5% y-o-y to US$2,262.4 million following higher income across all its segments.
Revenue from the group’s animal protein segment – which is captured under its subsidiary PT Japfa Tbk – was up by 25.6% y-o-y to US$1,539.6 million due to higher sales volumes of feed, day-old-chicks and broilers.
Operating profits from this segment correspondingly increased by 249.7% to US$183.8 million following more stable poultry prices in Indonesia after the government’s initiatives to balance demand and supply.
Similarly, the other animal protein segment was up by 26.0% y-o-y to US$459.6 million while its dairy division was up by 6.6% to US$260.7 million.
The growth in the animal protein segment was driven by higher sales volumes of swine fattening and swine feed in Vietnam.
However, the segment’s operating profit was down to US$35.4 million from US$47.4 million as a consequence of lower swine fattening prices in Vietnam compared to last year.
This comes as swine fattening prices were exceptionally high in 2020 due to the supply shortages caused by the African Swine Fever. Higher pork supplies in Vietnam have helped to depress the prices.
Meanwhile the growth in the dairy division was in response to higher sales volumes and prices of raw milk and beef in China.
Operating profit this segment was up 14.1% to US$53.1 million as raw milk prices remained strong due to the supply shortages in China.
Touching on Japfa’s results, CEO Tan Yong Nang says the company has “In 1H2021, we delivered a strong set of results across all segments and the Rolling Core PATMI without Forex for the past 12 months ending 30 June 2021 reached again a new all-time high since IPO at US$223.2 million”.
“This performance reflects our ability to execute, as well as our diversification strategy, which has proved to be effective even in the current unpredictable Covid-19 environment,” he adds in the company’s results filing on July 29.
As at 30 June, Japfa’s cash and cash equivalents stood at US$231.0 million, down from US$289.7 million in the previous year.
No interim dividend has been recommended for the current financial period as the group is looking to conserve cash for its operations. The group notes that it’s practice is to recommend an annual dividend payout with its full-year results.
Going forward, Tan hopes to deliver stronger growth with the company’s recent acquisition of two dairy farms in Shandong, China.
With this, the company’s quality raw milk capacity will grow while reducing the expansion lead time that will be needed if they had built new farms from scratch.
Through this, Japfa intends to have a stronger presence in the Chinese dairy market, where the demand for quality and healthy dairy products is expected to increase. It is also keen to take advantage of the favourable raw milk price environment there amid the current supply shortage in the market.
Aside from these, the expansion of the group’s swine farming capacity in Vietnam is also slated to bring more returns.
Shares in Japfa closed down a cent or 1.29% at 76.5 cents on July 29, before its results announcement.
