August 1, 2011
Poultry virus, cost hikes slash Bounty Fresh earnings
Higher input costs and poultry infection has cut revenues of Philippine poultry integrator Bounty Fresh Group of Companies.
But the company is expecting a recovery in the second semester, bolstering the firm's confidence in expanding abroad for its broiler operations in the medium-term, says Tennyson Chen, Bounty's president and chief executive.
In the first half, Chen tells the Philippine poultry industry was hit by Newcastle disease and then infectious bronchitis so growth was not good and also costs increased like feeds.
Chen also said Bounty Fresh Food, Inc. and Bounty Agro Ventures, Inc. posted single-digit profit drop in the first semester.
But the viruses that stunt growth and result in poultry mortality have already been controlled, adding that they are now in a recovery stage and hoping to recoup he claimed.
Chen said that a rebound in the second half will still allow the companies to top the combined PHP10 billion (US$238.60 million) in sales last year.
The 2010 sales hike had been driven by higher demand induced by election spending, up from more than PHP9 billion (US$214.74 million) in the previous year, according to earlier reports.
Bounty Agro Ventures posted an 11.84% sales growth to PHP6.61 billion (US$157.71 million) last year from PHP5.91 billion (US$141.01 million) while costs of sales that include raw materials jumped by 53.64% to PHP657.32 million (US$15.68 million), according to latest available filings with the Securities and Exchange Commission.
Higher sales allowed the Bounty Fresh group to record PHP74.46 million (US$1.77 million) in net income, up by 74.54% from PHP42.66 million (US$1.008 million) in the previous year.
In the medium term, the agro-industrial firm wants to expand beyond the Philippines,. Chen said.
Chen said tariff and non-tariff barriers like the halal certification discourage exports so the company wants its own production hub in foreign countries.
Bounty Fresh is in talks with possible partners in neighboring countries to set up farms and production plants, he said.
The gross domestic product growth and population is high in Indonesia, he said, adding that Bangladesh is also a growth area given its population despite a comparatively slower economic growth. Chen said that negotiations in Bangladesh are still ongoing but no finalities yet.
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.
