The Jakarta Post
Publicly listed poultry firms in the country ended last year with lackluster financial performances, surging expenses and low prices squeezing revenues.
Major poultry players PT Charoen Pokphand Indonesia (CPIN), PT Japfa Comfeed Indonesia (JPFA) and PT Malindo Feedmill (MAIN)all recorded significant a year-on-year (yoy) decline in their net profitslast year.
The country's biggest poultry company by asset, CPIN, saw its net profit plunge by 30.8 percent to Rp 1.75 trillion (US$134 million) last year from Rp 2.53 trillion in 2013, while JPFA recorded a 48.3 percent decline to Rp 318.83 billion from Rp 616.31 billion yoy.
MAIN, meanwhile, booked Rp 84.56 billion in net losses last year, a slump from Rp 241.25 billion in net profits from 2013.
CPIN, JPFA and MAIN actually saw their revenues grow by 13.6 percent, 14.2 percent and 7.4 percent to Rp 29.15 trillion, Rp 24.46 trillion and Rp 4.5 trillion, respectively, last year.
The revenue growth, however, could not offset ballooning expenses, which were partly caused by increasing raw material prices due to the weakening of the rupiah against the US dollar.
JPFA, for example, saw its expense for raw materials rise by 16.6 percent to Rp 18.45 trillion from Rp 15.83 trillion previously.
Poultry firms use soybeans and corn as their raw materials, which are mostly imported from the US.
'Declining prices on the back of day-old-chick [DOC] oversupply, currency depreciation and fuel-price hikes became the main factors deflating the companies' financial performance,' Mandiri Sekuritas analyst Herman Koeswanto said in a report.
DOC average selling price in October and November last year stood at around Rp 1,500 to Rp 1,700 per bird, far lower compared to the third quarter price in 2013 of Rp 3,500 per bird, according to him.
The firms' performance is, however, expected to start getting better this year as commodity prices start to decline and Japan lifted its ban on processed-chicken imports from Indonesia.
Bahana Securities analyst Michael W. Setjoadi said lower corn and soybean prices would help offset the adverse impact of the rupiah's depreciation on the poultry industry, in which 80 percent of costs of goods sold (COGS) were imported.
'Further support should come from Japan, with about 10 percent of global broiler chicken imports [...],' he said.
CPIN, JPFA and MAIN are all included among the poultry firms that have been granted permission to export their processed-chicken products to Japan.
In another development, JPFA announced on Wednesday that it had acquired 70 percent of the issued share capital of PT Multi Makanan Permai, worth Rp 483 million, to expand its business portfolio.
'The acquisition provides JPFA with an opportunity to expand its customer portfolio,' said JPFA corporate secretary Maya Pradjono.
Multi Makanan Permai sells animal feed raw materials. Most of the customers are poultry farmers and smaller localized feed mills, market segments that have not yet been tapped by JPFA.