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Japfa hit hard by rupiah, rising costs in first half
Publicly listed poultry firm PT Japfa Comfeed Indonesia continued suffering from net losses in the first half of this year due to foreign exchange (forex) volatility and the rising cost of goods sold
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ublicly listed poultry firm PT Japfa Comfeed Indonesia continued suffering from net losses in the first half of this year due to foreign exchange (forex) volatility and the rising cost of goods sold.
The company ended the first six months of this year with Rp 272.13 billion (US$20.2 million) in net losses, a stark contrast to Rp 325.99 billion in net profit it reaped during the same period last year.
Rising costs of goods sold along with the weakening rupiah have hit the company's net sales hard, which dropped slightly to Rp 12.15 trillion in the January-June period of this year from Rp 12.19 trillion over the same period last year, according to its unaudited financial report published on the Indonesia Stock Exchange (IDX) on Tuesday.
The firm's cost of goods sold increased by 2.8 percent year-on-year (yoy) to Rp 10.6 trillion in the first half of this year from Rp 10.4 trillion last year.
Japfa also recorded rising raw material costs from Rp 9.38 trillion to Rp 9.51 trillion, highlighting the fact that relatively low commodity prices could not sufficiently compensate the weakening rupiah.
Like other poultry companies, Japfa mostly imports corn and soybean as raw materials.
US soybean prices surged to $10.60 a bushel on June 10, the highest closing price since Nov. 11 last year. However, the prices have pulled back from that high, settling at $10.10 a bushel last Friday, according to a USDA report.
'Around 80 percent of costs of goods sold are related to imported materials,' Bahana Securities analyst Michael W. Setjoadi said previously in a report.
The low commodity prices, however, failed to boost the firm's financial performance as rupiah continued to weaken to a level of 13,444 per US dollar as of Wednesday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).
The local currency rate against the US dollar has plunged by 7.8 percent year-to-date.
With the unfavorable rupiah exchange rate, Japfa netted Rp 267.43 billion in forex loss during the first six-month period of this year from Rp 20.59 billion in net profit in the same period last year.
Previously in June this year, rating company Pefindo downgraded Japfa's ratings from A+ to A.
'The downgrade is driven by weakening capital structure and cash flow protection measures as a result of sustained pressure on the company's profitability margins due to challenging conditions in the company's day-old-chick and commercial farming business,' said Pefindo analyst Haryo Koconogoro.
In the first half of this year alone, Japfa's DOC sales slumped by 6.3 percent from Rp 720.5 billion to Rp 675.01 billion in the same period last year.
The firm's total liabilities and equity hit Rp 11.9 trillion and Rp 4.9 trillion, respectively, in the first half of this year, bringing its debt-to-equity ratio up to 2.43.
The ratio is higher than 2.04 at end of December last year.
Japfa slashed its capital expenditure this year to Rp 750 billion from the initial budget of Rp 1.8 trillion.
The firm's cash is currently at Rp 910 billion.
