KUALA LUMPUR: Leong Hup International Bhd’s (LHI) net profit for the first quarter (Q1) ended March 31, 2020 fell to RM21.79 million from RM60.58 million posted in the same quarter last year.
Revenue decreased 4.8 per cent to RM1.43 billion from RM1.51 billion 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 ASP of day-old-chicks and livestock feed volume in Indonesia, as well as lower ASP of broiler chickens in Vietnam.
“Revenue from livestock and poultry-related products segment weakened nine per cent to RM782.63 million from RM859.65 million in the corresponding quarter a year ago, reflecting the impact of overall softness in demand amid 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 marginally by 0.7 per cent to RM648.15 million in Q1 2020 as compared to RM643.63 million recorded in Q1 2019, driven by improvement in sales volume of livestock feed in Vietnam.
In a separate statement, executive director/group chief executive officer Tan Sri Lau Tuang Nguang said the group operated against a backdrop of challenging operating environment which was exacerbated by the COVID-19 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, he 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, include maintaining adequate liquidity for operations and undertaking a strategic review of the company’s capital expenditure to prepare for the challenges ahead,“ he added. -Bernama
