May 11, 2023

Venky's India reports decline in quarterly profit due to rising feed costs

Venky's India Ltd, one of the leading poultry firms in India, announced a significant drop in quarterly profit on Wednesday, citing a surge in the cost of poultry feed ingredients and lower sales as the main factors, Yahoo! Finance reported.

The company reported a 56% decline in consolidated profit after tax for the March quarter, amounting to INR 252.3 million (~US$3.1 million; INR 10 = US$0.12). Total revenue from operations also decreased by 15%, reaching INR 10.42 billion (~US$127 million).

While revenue from Venky's oilseed segment, which is its largest in terms of sales, plummeted by nearly 25%, the decline in its poultry business, the second-largest segment, was relatively smaller at 3%.

But Venky's poultry business experienced a severe blow to its profit margins due to a significant increase in the prices of essential poultry feed ingredients like soybean and corn, the company said. Core profit margins contracted from 6.99% to 3.26%.

Industry analysts said that excessive production of eggs poses a challenge for the sector, and reducing production levels could lead to improved realisation and profitability.

Venky's highlighted that expansion projects in its Animal Health Products division, located in the western state of Maharashtra, are progressing as planned, with construction expected to be completed by June.

-      Yahoo! Finance