Vitarich earnings rise 18% to P107M

VITARICH Corp. on Thursday announced that its second-quarter net income attributable to equity holders rose by 18.2% to P106.91 million from P90.42 million.

Revenues likewise surged by 22.34% to P2.91 billion from P2.38 billion in 2021.

“We delivered record-breaking revenue performance even in the face of challenging macroeconomic headwinds. Through volume gains, responsible price increases, and operational efficiencies, we limited the impact of higher input costs on our profitability,” President and Chief Executive Ricardo Manuel M. Sarmiento said.

“At the same time, we successfully executed on our strategic plan of growing our core. We added several key accounts to our hotels, restaurants, institutional (HRI) customer list — including some leading fastfood chains — and launched our branded chicken products, Cook’s, in various parts of the country,” he added.

In the first half of the year, net income dropped by 46.7% to P147.74 million from P276.94 million.

On the other hand, revenues increased by 20.7% to P5.53 billion from P4.58 billion in the prior-year period, led by the foods business.

“Cost of goods climbed 25% to P4.9 billion primarily due to higher sales volume and prices of raw materials, such as wheat, soybean, and corn, which saw an average increase of 32% compared to the same period last year,” Vitarich said.

“Similarly, the recent surge in fuel, energy, and labor costs impacted cost of sales as well as operating expenses, which also rose 25%. As a result, gross profit was P591.9 million, representing a gross margin of 11% compared to 14% in the first half of 2021, and operating profit was P241.9 million,” it added.

The foods segment recorded a 55% increase in first-half revenues to P2.99 billion. It is the largest contributor to group revenues at 54%.

“Volume expanded 45% supported by an average price increase of 6%. Demand was particularly high in Luzon and Mindanao,” the firm added.

The segment added a total of 13 HRI customers including some leading fastfood chains, providing custom product and menu development suited to customer specifications, quality, and cost requirements.

Cook’s dressed chicken was introduced in Isabela, Camarines Sur, Camarines Norte, Albay, and Northern Samar and is now available to HRI customers, supermarkets, and wet markets in these areas.

Meanwhile, feeds revenues, which comprise 7% of the group’s total, grew 5% to P2.24 billion driven by pricing, which rose over the past two quarters to mitigate high input cost inflation.

“Specifically, pricing increased 14% compared to the year-ago period versus input costs at 23%. As expected, pricing had an unfavorable impact on volume which slightly contracted by 7%,” it added.

The segment expanded its distribution network across the Cordillera Administrative Region, Negros Occidental, Capiz, and Antique through additional retail stores and end users such as backyard farms.

On the other hand, revenues from the farms segment declined 44% to P291.5 million. The segment comprised 5% of revenues.

“The marked increase in feed input costs exerted a significant strain in reaching optimal feed conversion ratios targets. As a result, some poultry growers cut costs either by reducing volume or using feed input alternatives, while some carried out price hikes and passed on the increased cost to consumers,” Vitarich said.

It added that the combination of tighter local border restrictions and the unusually hot weather led to a mid-to-high single-digit decline in harvest recovery rates.

The shortage of important feed inputs, which is mainly corn, was a contributing factor to the chicken supply gap in June and is expected to persist as a major source of uncertainty for the industry unless effective measures are implemented to improve the long-term competitiveness of the corn industry, Vitarich said.

“We expect input costs to remain elevated as we move through the balance of the year. We are taking necessary actions to manage through the current market conditions while remaining focused on our growth plans and long-term opportunities. We are innovating, sourcing, and finding alternative raw materials, when possible, while more prudently managing inventory levels, especially of imported items, in view of pressures on the foreign exchange rate and inflation impact,” Chief Finance Officer Maria Alicia C. Arnaldo added.

At the stock exchange, Vitarich shares ended unchanged at P0.60 on Thursday. — Luisa Maria Jacinta C. Jocson