Profit companies

Livestock company profits hit by rising feed prices

VIETNAM, May 19 – Customers buying MEATDeli, a Masan MEATLife product, at a Vinmart+ store. — Stock Photo

HÀ NỘI — Rising feed prices eroded the profits of livestock companies in the first quarter of 2022.

VNDirect Securities Corporation said that the Russian-Ukrainian conflict had a negative impact on the animal feed industry, as the supply of raw materials for the production of animal feed, such as corn, soybeans and wheat, was disrupted, causing prices to rise sharply.

The two countries are the world’s largest and third largest exporters of wheat, respectively, accounting for a third of the total wheat trade. In addition, Ukraine is the second largest maize exporter, accounting for 22% of global turnover.

In early April, the price of imported maize at Cái Lân port in Quảng Ninh province reached 9,200 to 9,500 VNĐ per kg (0.4 to 0.41 USD per kg), an increase of 20 to 25 % compared to the end of 2021. and up 50% compared to the same period last year.

The average price of imported soybeans in the first quarter was $637.6 per ton, up 18% year-on-year, while the price of imported wheat also rose 36% to an average of $363.3 per ton. tonne.

Under increased feed price pressure, live pig prices also showed an increase, but not significantly. The domestic live pig market in March fluctuated around VNĐ52,000-57,000 per kg, up 11-14% from the start of the year, while the farm gate price for chicken fell 11 %. However, compared to the same period last year, live hog prices fell 23-27%, while chicken prices climbed 19%.

Due to the pressure, many livestock companies have reported a sharp decline in profits or even losses. Dabaco Group (HoSE: DBC) reported that its first quarter net revenue edged up 13.3% year-on-year to VNĐ2.8 trillion. But the sharp increase in the cost of goods sold caused its gross profit to fall by 60% to VNĐ254 billion. As other expenses did not fluctuate much, profit after tax was only 8.6 billion VND, up 2.3 percent from the same period last year. This is Dabaco’s lowest profit since the second quarter of 2019.

The company said complicated developments in the Russian-Ukrainian conflict had affected the supply chain of inputs such as corn, wheat and soybeans, causing severe shortages. Supply chain disruption and pandemic hurdles have pushed the cost of animal feed an inch higher, while the price of livestock products has not increased.

Similarly, the agriculture segment of Hòa Phát Group (HoSE: HPG) also performed poorly in the first quarter of this year. Of which, income from agricultural enterprises fell by 27% compared to last year to reach 1.6 trillion VNĐ. It lost nearly VNĐ56 billion, while in the first quarter of 2021, the agricultural segment made a profit of VNĐ392 billion.

As Masan MEATLife Corporation (UPCoM: MML) spun off its animal feed segment, the company’s first quarter net sales fell sharply to VNĐ931 billion from VNĐ4.7 trillion last year . However, the parent company’s after-tax profit doubled to VNĐ274 billion thanks to financial activities.

Considering only the meat business, first-quarter revenue was down slightly by 5.4% due to lower pork prices, while sales volume increased.

As a result, branded pork sales reached NV351 billion, down 4%, and farmed pig revenues reached NV197 billion, down 57% due to a 25% drop. % of pork price. At the same time, sales of branded chicken meat (3F Viet) increased by 31.4% to reach VNĐ373 billion, thanks to a 16.5% increase in sales volume and a 13.8% increase in price.

Masan MEATLife’s earnings before interest, taxes, depreciation and amortization (EBITDA) was negative VNĐ28 billion, while that for the same period last year was positive VNĐ498 billion.

The company executive said pork production 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, grow its business through sustainable sourcing, increase capacity utilization, integrate products into the WinCommerce system and diversify its processed meat portfolio.

A report by the Ministry of Agriculture and Rural Development indicates that in April, prices for live pigs in parts of the country tended to increase again due to the reopening of restaurants, schools and factories, which which boosted consumption, while supply fell and feed prices rose. . Chicken and egg prices also rose slightly as consumer demand gradually recovered. —VNS