Better Second-Half Ahead, Says Bounty Fresh

PHILIPPINES - Newcastle disease and increases in costs have hit earnings at the Bounty Fresh group.
calendar icon 1 August 2011
clock icon 4 minute read

The Bounty Fresh group of companies posted losses in the first half due to higher input costs and lower production due to a poultry infection, its top executive said late last week.

According to Business World, an outbreak of Newcastle disease among several poultry stock along with higher commodity costs slashed the net income of the Bounty Fresh group of companies in the first semester, a ranking official said.

But a recovery is expected in the second semester, bolstering the firm's confidence in expanding abroad for its broiler operations in the medium-term, the official said.

Tennyson G. Chen, president and chief executive of the Bounty Fresh Group, said in an interview: "In the first half, the Philippine poultry industry was hit by Newcastle disease and then infectious bronchitis so growth was not good and also costs increased like feeds."

Mr Chen said Bounty Fresh Food, Inc. and Bounty Agro Ventures, Inc. posted single-digit profit drop in the first semester.

However, the viruses that stunt growth and result in poultry mortality have already been controlled, he claimed.

Mr Chen said: "We are now in a recovery stage where we need to recover whatever losses and under-performance we had in the first half.

"Hopefully we can break even [in profits] or at least [end the year] in the black."

He added that a rebound in the second half will still allow the companies to top the combined 10 billion pesos (PHP) in sales last year.

The 2010 sales hike had been driven by higher demand induced by election spending, up from more than PHP9 billion in the previous year, according to earlier reports.

Bounty Agro Ventures posted an 11.84 per cent sales growth to PHP6.61 billion last year from PHP5.91 billion while costs of sales that include raw materials jumped by 53.64 per cent to PHP657.32 million, according to latest available filings with the Securities and Exchange Commission.

Higher sales allowed the Bounty Fresh group to record PHP74.46 million in net income, up by 74.54 per cent from PHP42.66 million in the previous year.

In the medium term, the agro-industrial firm wants to expand beyond the Philippines, Mr Chen said.

He explained that tariff and non-tariff barriers like the halal certification discourage exports so the company wants its own production hub in foreign countries.

Bounty Fresh is in talks with possible partners in neighboring countries to set up farms and production plants, he said.

"The gross domestic product growth and population is high in Indonesia" Mr Chen, adding that Bangladesh is also a growth area given its population despite a comparatively slower economic growth.

"We are continuing negotiations but so far we have yet to finalise any."

Business World adds that the Bounty Fresh group was put up in 1993, dressing 1,000 chickens per day. It now claims to process 6,000 birds per hour with the company's updated technology.

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