Livestock companies profit hit by rising animal feed prices

HÀ NỘI — Higher animal feed prices have eroded livestock companies’ profits in the first quarter of  二0 二 二. 

VNDirect Securities Corporation said that the Russia-Ukraine conflict had a negative impact on the animal feed industry as supplies of raw materials for animal feed production like corn, soybeans and wheat, are disrupted, causing prices to rise sharply.  

The two countries are respectively the world's leading and third largest wheat exporter, accounting for one-third of the total trade of this co妹妹odity. Besides, Ukraine is the second largest corn exporter, accounting for  二 二 per cent of the world turnover.

As of early April, the price of imported corn at Cái Lân port, Quảng Ninh Province, reached VNĐ 九, 二00- 九, 五00 per kg (US$0. 四-0. 四 一 per kg), an increase of  二0- 二 五 per cent compared to the end of  二0 二 一 and up  五0 per cent over the same period last year. 

The average price of imported soybeans in the first quarter was $ 六 三 七. 六 a tonne, up  一 八 per cent year-on-year, while the price of imported wheat also increased by  三 六 per cent to an average of $ 三 六 三. 三 a tonne.

Under higher feed prices pressure, live hog prices also posted an increase, but not significantly. The domestic live pig market in March fluctuated around VNĐ 五 二,000- 五 七,000 a kg, up  一 一- 一 四 per cent compared to the beginning of the year, while the farm-gate price of chicken declined by  一 一 per cent. However, compared to the same period last year, live pork prices fell by  二 三- 二 七 per cent, while chicken prices climbed by  一 九 per cent.

Due to the pressure, many livestock enterprises reported a sharp decrease in profits or even losses. Dabaco Group (HoSE: DBC) announced that its first quarter net revenue increased slightly by  一 三. 三 per cent on-year to VNĐ 二. 八 trillion. But the sharp rise in cost of goods sold caused its gross profit to dip by  六0 per cent to VNĐ 二 五 四 billion. With other expenses did not fluctuate much, profit after tax was only VNĐ 八. 六 billion, equal to  二. 三 per cent of the same period last year. This is Dabaco's lowest profit since the second quarter of  二0 一 九.

The company said that the complicated developments of the Russia-Ukraine conflict had affected the supply chain of input materials such as corn, wheat and soybeans, causing a serious shortage. The disruption of the supply chain and obstacles due to the pandemic caused the cost of animal feed to inch higher, while the price of livestock products did not increase.

Similarly, Hòa Phát Group (HoSE: HPG)’s agricultural segment also reported poor performance in the first quarter of this year. Of which, revenue from agricultural businesses fell  二 七 per cent over last year to VNĐ 一. 六 trillion. It lost nearly VNĐ 五 六 billion, while in the first quarter of  二0 二 一, the agricultural segment brought in profit of VNĐ 三 九 二 billion.

As Masan MEATLife Corporation (UPCoM: MML) separated its animal feed segment, the company’s net revenue in the first quarter dropped sharply to VNĐ 九 三 一 billion from VNĐ 四. 七 trillion last year. However, the parent company's profit after tax doubled to VNĐ 二 七 四 billion thanks to financial activities.

If only taking the meat business into account, the first quarter's revenue recorded a slight decrease of  五. 四 per cent due to the decrease in the price of pork, while sales volume increased.

Accordingly, sales of branded pork reached VNĐ 三 五 一 billion, down  四 per cent, and revenue from farm pigs reached VNĐ 一 九 七 billion, down  五 七 per cent due to a slump of  二 五 per cent in the pork price. Meanwhile, sales of branded chicken meat ( 三F Viet) were up  三 一. 四 per cent to VNĐ 三 七 三 billion, thanked to a rise of  一 六. 五 per cent in sales volume and a jump of  一 三. 八 per cent in price.

Masan MEATLife’s earnings before interest, taxes, depreciation and amortisation (EBITDA) was negative VNĐ 二 八 billion, while that of the same period last year was positive VNĐ 四 九 八 billion.

The company’s leader said that pork production has entered a stable zone in the first quarter and is expected to increase by the end of the year. Masan MEATLife aims to improve its EBITDA, expand businesses through sustainable supply development, increase capacity utilisation, bring products into the WinCo妹妹erce system, and diversify its processed meat portfolio.

A report of the Ministry of Agriculture and Rural Development said that live hog prices in regions across the country in April tended to increase again due to the reopening of restaurants, schools and factories, boosting consumption, while the supply decreased and prices of animal feed climbed. Chicken and egg prices also edged higher as consumer demand gradually recovered. — VNS