KUALA LUMPUR: Leong Hup International Bhd’s (LHI) net profit for the first quarter ended March 31, 2020 fell to RM21.79 mil from RM60.58 mil in the same quarter last year.
Revenue decreased 4.8% to RM1.43 bil from RM1.51 bil previously.
The company said the lower revenue was due to lower sales of livestock feed and lower average selling price (ASP) of eggs in Malaysia, decrease in the ASP of day-old chicks and livestock feed volume in Indonesia, as well as lower ASP of broiler chickens in Vietnam.
“Revenue from the livestock and poultry-related products segment weakened 9% to RM782.63 mil from RM859.65 mil in the corresponding quarter a year ago, reflecting the impact of overall softness in demand with the onset of the Covid-19 pandemic at the beginning of the year,” it said in a filing with Bursa Malaysia today.
The performance of the feedmill segment, however, remained stable as revenue edged up 0.7% to RM648.15 mil in 1Q20 from RM643.63 mil in 1Q19, driven by an improvement in the sales volume of livestock feed in Vietnam.
In another statement, executive director/group CEO Tan Sri Lau Tuang Nguang said the group operated in a challenging operating environment which was exacerbated by the pandemic since the beginning of the year.
“This has impacted demand, giving rise to unfavourable selling prices of poultry products in our markets and exerting considerable pressure on margins,” he said.
Nevertheless, he said, as national food security took precedence during this critical period marked by movement controls and social restrictions, the company had ensured uninterrupted operations and continuous production of its products.
On prospects, Lau said LHI was expected to see continuing weakness in near-term demand within its markets although certain economic sectors were allowed to reopen.
Additionally, he said, the inevitable adjustment in the industry supply chain was expected to give rise to volatility in the ASP in the forthcoming quarters.
“Going forward, the group will remain vigilant and continue to practise prudent financial management measures, including maintaining adequate liquidity for operations and undertaking a strategic review of the company’s capital expenditure to prepare for the challenges ahead,” he added. – May 19, 2020, Bernama