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Can Japfa overcome near-term cyclical pressures to see turnaround?

Uma Devi
Uma Devi8/8/2019 05:52 PM GMT+08  • 4 min read
Can Japfa overcome near-term cyclical pressures to see turnaround?
SINGAPORE (Aug 8): Lower average selling prices and higher costs drove earnings for agri-food company Japfa down to US$5 million ($6.8 million) for the 2Q19 ended June, a steep 83% drop from a year ago.
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SINGAPORE (Aug 8): Lower average selling prices and higher costs drove earnings for agri-food company Japfa down to US$5 million ($6.8 million) for the 2Q19 ended June, a steep 83% drop from a year ago.

Segmentally, one of the key contributors of Japfa’s weak performance was Japfa Cornfeed Tbk (JPFA), which saw earnings decline 23% y-o-y to US$18.6 million. This was on the back of higher corn prices, which pressured margins, and softer broiler prices, which led to EBIT declining 27.2% y-o-y to US$65.2 million.

Similarly, the Animal Protein Other segment reported an operating loss of US$0.1 million for 2Q19, compared to an operating profit of US$10.1 million a year ago, as a result of a lower swine fattening average selling price in Vietnam. This was largely due to the impact of the African Swine Fever outbreak in Vietnam.

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