September 1, 2014
Japfa''s H1 2014 profit plunges 34% on soaring cost
Japfa Comfeed, one of Indonesia''s biggest poultry producers, recorded a 34% profit drop in the first half of this year as rising operating costs outpaced sales, the Jakarta Globe reports.
The company reported a fall in net income to US$28 million in the January-June period from US$40 million in the same period last year. Sales rose 18% to US$1.05 billion, but the cost of goods sold jumped 22% to US$891 million.
Japfais engaged in animal feed and day-old-chicken breeding business. It also has aquaculture, cattle breed and commercial farm units. Indonesian companies including Japfa have had to bear higher costs since June of last year after the average 33% rise in subsidised fuel prices. Apart from that, higher labour wages and a weakening rupiah contributed to higher costs.
However, the company believes that growth prospects in Indonesia are good. In a country with a predominantly Muslim population, poultry meat has served as the cheapest protein source and substitute meats with relatively the same price are limited.
Japfa and rival Charoen Pokphand Indonesia, a unit of Thailand conglomerate Charoen Pokphand, control more than half of the animal feed and day-old-chicken breeding market. Charoen Pokphand, in its unaudited financial report published earlier, similarly experienced a fall in net income by 18.2% to US$108 million.
Japfa runs 16 poultry feedmills in Sidoarjo, Cirebon, Lampung, Tangerang, Makassar, Sragen, Medan, Padang, Bati-Bati, Cikande, Gedangan, Surabaya and Grobogan. The company also runs 57 breeding farms and 24 hatcheries in Sumatera, Java, Kalimantan, Sulawesi and Bali. It also has some cattle feedlots, breeding farms, fish and shrimp feedmills and slaughter houses.