Vitarich profit surged 44% to P129M in 2022 as chicken sales rose

PHOTO FROM VITARICH CORP/WEBSITE

MANILA  -Listed feed manufacturer Vitarich Corp. saw its net income surge by 44.2 percent last year to P129 million on the back of record-breaking revenues.

In a disclosure, Vitarich reported that its revenues grew by 23.9 percent to P12 billion from P9.6 billion, as most business segments raked in profits with “strong momentum” in the foods segment.

This is the first time the company’s topline surpassed the P10-billion mark in its 60-year history, it noted.

“2022 brought many challenges to families and businesses particularly as inflation intensified and food prices rose by double digits. Despite this difficult environment, our team at [Vitarich] worked tirelessly and delivered solid revenue growth and improved net income,” said Vitarich president and CEO Rocco Sarmiento.

The foods segment, which covers the production and sale of live and dressed chicken, saw its revenues grow by 48 percent to P6.2 billion, comprising 52 percent of Vitarich’s overall revenues, as the more robust recovery in food services and restaurants lifted demand.

The segment’s volume climbed by 22 percent led by demand in Luzon and Mindanao while average prices increased by 19 percent, reflecting significant cost inflation.

Nationwide footprint

This segment expanded operations nationwide in the following areas: Isabela and Bicol in Luzon; Samar and Leyte in Visayas and Zamboanga City, Bukidnon, Marawi, Sultan Kudarat and Sarangani in Mindanao.

It also introduced Cook’s Flavor Origins which included differentiated items such as French Roast, Mediterranean Roast and South African Roast.

Meanwhile, revenues of the feeds segment, accounting for 44 percent of revenues, increased by 11 percent to P5.2 billion. It was bolstered by pricing which rose by 18 percent versus input costs of 23 percent.

“As expected, price actions had an unfavorable impact on volume which declined [by] 6 percent,” it added.

Vitarich said it made “significant” progress as the number of distributors, megadealers and retail feed outlets across Capiz, Aklan and Central Negros increased.

Aside from launching a multiyear campaign that will establish the brand as “The Specialist in Animal Nutrition,” the firm revealed initiatives that address sustainability opportunities such as the transition to reusable woven feed sacks from laminated bags in order to manage its product design and lifecycle.

Day-old chicks

Farms revenues, however, declined by 32 percent to P529 million due to the shortage of day-old chicks. It makes up the remaining 4 percent of revenues.

A fair value adjustment on biological assets amounting to P12.1 million was recognized as part of revenues and P1.1 million as part of cost of goods.

Meanwhile, gross profit grew by 24 percent to P1.1 billion and operating profit went up by 21 percent to P223.2 million.

Cost of goods during the past year escalated by 23 percent to P10.9 billion due to higher sales volumes and input costs.

Key raw materials including wheat, soybean and corn, representing about 70 percent of feed costs, soared an average of 25 percent.

The firm also said price increases in fuel, energy and labor exerted further pressure on handling costs along with the return of some postpandemic operating costs, such as travel costs.

Vitarich is expecting to deliver another year of strong revenue growth and better margins this year.

“Looking ahead, management expects revenues to stay robust, but the ongoing challenges will temper the full impact of sales growth on company earnings. Supply chain headwinds will persist and pressure the costs of raw materials and transportation,” said the company in its annual report.