Leong Hup International's 3Q results up on-quarter


Despite the weaker 9M performance, LHI said the board expects a satisfactory financial performance for the current year with the gradual economic recovery taking place in the second half of 2020.

KUALA LUMPUR: Integrated poultry company Leong Hup International Bhd (LHI) recorded an improvement in its third quarter results ended Sept 30,2020 from a quarter ago with net profit at RM22.53mil on revenue of RM1.57bil.

It announced on Tuesday that group revenue increased by 10.4% from RM1.42bil in 2Q mainly due to higher sales volume of livestock feed in Indonesia and Vietnam.

Profit before taxation increased by 34.4% to RM30.80mil from RM22.92mil primarily due to better profitability from improved revenue in Vietnam and smaller losses from operations in Indonesia.

However, when compared with a year ago, LHI said its 3Q net profit fell by 49.2% to RM22.53mil from RM44.38mil. Its revenue increased by 3% to RM1.57bil from RM1.5bil. Earnings per share were 0.62 sen compared with 1.22 sen.

“There was a marginal increase of 0.8% in the group revenue from sales of livestock and poultry and related products in 3Q mainly contributed by Vietnam and the Philippines, ” it said.

Revenue from Vietnam increased due to higher sales volume of broiler chickens and eggs whereas the Philippines’ revenue increase was due to higher sales volume of broiler chickens.

LHI said the higher revenue from Vietnam and the Philippines was offset by a significant drop in revenue from Singapore due to a decrease in sales volume of fresh chickens and ducks as well as decrease in sales volume and selling price of processed food.

As for Malaysia, it recorded higher revenue from its processed foods segment and downstream business-to-consumers channel which was acquired in June 2020.

“However, the increase in revenue was significantly offset by a decrease in contribution mainly from day-old-chicks (DOC) as well as table eggs and animal health products.

“The EBITDA from livestock and other poultry related products decreased by 47.9% due primarily to lower revenue from unfavourable average selling price and sales volume of DOC and eggs in Malaysia as well as lower broiler price in Philippines, ” it said.

Nine months financial performance

For the nine months, its net profit fell by 50% to RM60.59mil from RM121.05mil in the previous corresponding period. Its revenue declined to RM4.43bil from RM4.51bil.

“The group’s revenue from sales of livestock and poultry related products decreased by 2.6% from RM2.52bil in the financial period ended (FPE) Sept 30,2019 to RM2.45bil in the FPE Sept 30,2020.

“The decrease in revenue mainly arose from Indonesia, Malaysia and Singapore, ” it said.

Elaborating on the performance, LHI said revenue from Indonesia was affected by lower average selling price of DOC, while the decrease in revenue from Malaysia was mainly caused by the decrease in sales volume and average selling price of eggs and DOC.

Its revenue in Singapore decreased following lower sales volume of fresh chickens and duck as well as lower sales volume and average selling price of processed food.

The decrease in revenue from Indonesia, Malaysia and Singapore were partially offset by an increase in revenue from Vietnam and the Philippines.

Vietnam’s higher revenue was mainly contributed by higher sales volume and average selling price of eggs as well as higher sales volume of broiler chickens. Higher sales volume of dressed chickens was the main contributor to the higher revenue in Philippines.

The earnings before interest, tax, depreciation and amortisation (Ebitda) from livestock and other poultry related products decreased by 72.3% due primarily to lower revenue from unfavourable average selling price and sales volume in Indonesia, Malaysia and Singapore.

Despite the weaker 9M performance, LHI said the board expects a satisfactory financial performance for the current year with the gradual economic recovery taking place in the second half of 2020.

This will be aided by the group’s strategy to move further downstream into business-to-consumer channel to improve margin stability, it said, adding it has adequate liquidity for operations and is well positioned to capture opportunities when the market recovers.

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