May 17, 2011

Bounty Fresh Group braces for H1 losses

Philippine poultry giant Bounty Fresh Group of Companies sees a net loss in the first half as its two units reel from high costs of chicken feed and other inputs, its top executive said.

Tennyson G. Chen, president and chief executive of the Bounty Fresh Group said that the company is bleeding because of high input costs.

Chen said the company is in difficult situation and that they are hoping to recoup losses in the second half.

The group is composed of Bounty Agro Ventures, Inc. and Bounty Fresh Food, Inc.

Last year, the company posted PHP10 billion (US$232.32 million) in sales partly due to higher demand induced by election spending, up from more than PHP9 billion (US$207.66 million) in the previous year.

But this year, Chen said higher prices of commodities like oil, soy, wheat and corn have hurt margins.

The wholesale price of yellow corn, the main ingredient for animal feed, for instance averaged PHP15.22 (US$0.35) per kilo in the last month of the first quarter, up 6.2% from the same period in 2010, according to data from the Bureau of Agricultural Statistics.

But yellow corn prices have eased to PHP14.54 (US$0.33) per kilo as of the first week of May.

Gasoline prices have meanwhile gone up by PHP9.75 (US$0.22) per liter from the start of the year to PHP58.35 (US$1.34)/liter as of May 13, data from the Energy department show.

Chen said they are trying to control costs as they are still banking on growth in the provinces to increase sales.

Bounty Fresh expects to end the year with 1,500 "Chooks-to-go" branches which retail roast chicken from the current 1,100 stores, Mr. Chen added.

The Bounty Fresh Group was put up in 1993, dressing 1,000 chickens per day.

It now claims to process 6,000 birds per hour with the company's updated technology.