SINGAPORE (Oct 30): Japfa, the vertically-integrated agri-food company, reported 3Q earnings surged nearly fivefold to US$14.3 million ($19.8 million) from a year ago, lifted by stronger performance across most business segments.

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Revenue for 3Q18 rose 7.8% to US$877.4 million from a year ago despite weakening currencies in major subsidiaries.

The Animal Protein Indonesia segment, PT Japfa Tbk continues to be the largest revenue driver for the group at 65%. Revenue increased 14.2% in Indonesian Rupiah terms, but only 4.2% in US Dollar terms due to the depreciation of the IDR.

Operating margin at the subsidiary increased 2.3 percentage points to 10.6% due to strong prevailing poultry average selling prices (ASP) in Indonesia that was mainly driven by lack of Day-Old-Chick (DOC) supply in Indonesia. Coupled with higher productivity of the breeding farms and quality of DOC breed, profit after tax rose 39% to US$39.0 million in 3Q18.

APO or Animal Protein Other, which refers to the group’s animal protein operations in Vietnam, Myanmar, India and China, continued its recovery in 3Q18, recording revenue of US$153.8 million, 29.4% higher than a year ago, and a turnaround in operating profit to US$11.7 million compared to a loss of US$6.4 million a year ago.

The Dairy segment continues to generate consistent profits despite pressure on raw milk prices, driven by higher milk yields and volumes achieved. Segment revenue rose 20.5% to US$101.9 million while operating profit rose to US$15.3 million.

While revenue from the Consumer Food segment declined 7.1% to US$53.8 million this quarter, notably, the segment recorded a 2.9% growth in IDR terms. The segment reported an operating loss of US$5.6 million due mainly to lower ASP, inability to pass on increased production costs arising from higher chicken raw material prices to consumers due to intense competition, and continued A&P spending to maintain market share and leadership that is keenly contested in the Indonesian market.

Japfa CEO Tan Yong Nang says, “Over 40% of the world’s total population live in our operating markets, pointing towards vast untapped market potential that we could capitalise on via our four business pillars – Poultry, Dairy, Swine and Consumer Food. We will continue to strengthen our market leadership, improve efficiency and productivity across our operations and reap synergies via our vertically-integrated business model that spans the entire value chain to drive long-term sustainable growth for Japfa going forward.”

Year to date, shares in Japfa have risen 35% to 69 cents.