November 26, 2021

 

Leong Hup reports Q3 net loss

 


Leong Hup International Bhd posted a net loss of RM53.42 million (~US$12.64 million; RM1 = US$0.24) in the third quarter ended September 30, 2021, down from a net profit of RM22.53 million (~US$5.33 million) in 3Q20, The Malaysian Reserve reported.


In a filing to Bursa Malaysia on November 23, pre-tax profit from livestock and poultry-related products plunged 350.6% mainly due to depressed average selling price (ASP) of broiler chickens in Vietnam and margin compression resulting from the general increase in feed costs which could not be passed on due to tepid demand as a result of the COVID-19 pandemic.


Leong Hup recorded a revenue increase of 14.98% to reach RM1.81 billion (~US$0.43 billion) for the quarter compared to a year ago, underpinned by higher revenue from Indonesia and Malaysia.


The company attributed the increase in revenue to higher sales volume of broiler chickens and favourable ASP of day-old-chicks and broiler chickens in Indonedia, and for Malaysia, an increase in ASP of eggs and the expansion of its downstream business-to-consumer channel from June 2020.


For the cumulative nine months ended September 30, Leong Hup's net profit fell 21.7% to RM47.42 million (~US$11.22 million) from RM60.59 million (~US$14.33 million) a year ago.


Leong Hup CEO Tan Sri Francis Lau said Southeast Asian countries saw strong progress in the pace of COVID-19 vaccinations recently, which is expected to bode well for the recovery in economic activities going forward.


He said the pace of recovery is expected to be rather uneven across the group's operating markets, with certain countries including Malaysia and Singapore preparing to enter the endemic phase of COVID-19 as nearly all sectors have been allowed to reopen, although at a reduced capacity. He added that countries like Vietnam, Indonesia and the Philippines have started to gradually relax lockdown measures as these countries increase vaccination rates.


Lau however said that demand is still below pre-COVID-19 levels and business conditions remain tough.


He is "optimistic the group will continue to navigate the new market reality with (its) fundamentals firmly intact."

 

"Our priority is the health and safety of our people and we remain steadfast in supporting domestic food security and the economic recovery of our operating markets, while staying focused on the execution of our 'Farm-to-Plate' strategy," he said in a separate statement.