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KUALA LUMPUR: Leong Hup International Bhd almost doubled its net profit in the second quarter as higher selling prices of day-old-chicks (DOC) and broiler chickens increased its margin.
The integrated poultry company has operations in Malaysia, Singapore, Indonesia, Vietnam and Philippines.
Net profit in the three-month ended June 30 rose to RM30.5mil from RM16.2mil a year ago.
Revenue improved to RM1.85bil from RM1.4bil previously. In a filing with Bursa Malaysia today, Leong Hup said earnings before interest, taxes, depreciation, and amortisation (Ebitda) from livestock and other poultry related products increased by 271.3% during the quarter.
"The increase was primarily due to better margins arising from higher average selling price and sales volume of DOC in Indonesia and broiler chickens in Philippines. The Ebitda gains were partially offset by lower average selling price of eggs in Malaysia," it said.
The group’s revenue from sales of livestock and poultry related products increased by 23% to RM992mil, while feedmill contribution jumped 39.7% to RM859mil.
"Notwithstanding the increase in total revenue of livestock feed, Ebitda decreased by 13%, as the increase in raw material costs outpaced the increase in average selling price," Leong Hup said.
Despite the improved results, the company warned that the recent surge in Covid-19 cases in most of the countries it operates has adversely affected the economic activities, income levels and domestic consumption patterns."The resultant fluctuations in demand and adjustments in supply have given rise to volatility in the average selling prices of DOC and broiler chickens," Leong Hup said.
"The performance of the Group in the next 6 months will depend on, among others, the extent to which the Covid-19 pandemic is effectively controlled and restrictions are eased in each of the Group’s operating markets," it added.
Leong Hup, however, reiterated that the group has adequate liquidity for operations and is well-positioned to capture opportunities when the market recovers.
In a statement today, executive director and group chief executive officer Tan Sri Lau Tuang Nguang has been making a concerted effort to augment the Group’s “Farm-to-Plate” business model, which has been identified as a key growth pillar for the Group in this ‘new normal’.
“Indonesia continued to lead the way in terms of the Group’s overall performance improvement, while the expansion of the B2C channel in Malaysia and its growing contribution towards the Group’s bottom line is nothing short of impressive.” he said.
Lau sasid the group had since 2020 reprioritised its capital expenditure, significantly stepping up investment into the downstream business in its operating markets, particularly in Malaysia and Indonesia."In Malaysia, its convenience-driven, hybrid quick-service restaurant cum bakery concept outlets, the Baker’s Cottage, have garnered popularity among budget-conscious consumers. With 95 outlets at the start of 2021, the Group is well placed to grow its B2C segment further and aims to have a total of 160 outlets throughout West Malaysia by year’s end," he said.