Axelum Resources Corporation, the country’s largest fully-integrated manufacturer and exporter of coconut products, reported a 47.4 percent drop in net income to P202.94 million for the first half of 2020 from P385.76 million in the same period last year.
“We managed to sustain our profitability in the second quarter despite significant headwinds related to COVID-19, which highlights our Company’s innate resilience and ability to quickly conform to the rigors of this new operating environment,” said Axelum President Henry J. Raperoga.
In its disclosure to the Philippine Stock Exchange, the firm said demand for its products remained strong in the first half of 2020 but revenues fell 9 percent (from P2.61 billion to P2.39 billion) as COVID-19 related government restrictions, such as road checkpoints, reduced the Company’s access to coconut supply.
Without adequate coconuts, Axelum said it could not fulfill all of its customers’ demands in the first half of 2020 but it did manage to satisfy the orders from its most important customers and minimize the revenue decline.
“Satisfying customer demand came at a higher cost in the first half of 2020 because of COVID-19,” the firm said noting that it took many steps to ensure the health and safety of its workers including shuttling staff to and from their homes and enforcing strict social distancing measures at its facilities.
Axelum was also forced to fly in materials that could normally be sent by sea due to supply chain congestion. Also, with lower coconut volumes and with COVID-19 related operating restrictions, its plant operated less efficiently than it would in normal times.
The firm said that, as the second quarter progressed, coconut deliveries increased and are now at near-normal levels.
Axelum said it has also adjusted to the “new normal” caused by COVID-19 and strategically extended coconut sourcing areas while capitalizing on priority volumes from major suppliers to build sufficient inventory.
This has allowed the company to increase milling days and produce at optimal levels. Costs of primary input components (such as packaging materials) remained elevated, but Axelum expects this to abate as supply chains gradually stabilize.
Axelum said it remains on-track to meet its volume commitment of at least 25 million liters of coconut water for 2020 and the Company remains upbeat about its business prospects for the second half.
“Having now adjusted to the ‘new normal’ and with strong demand for our products, we expect business performance to improve in the second half of 2020 and into 2021,” added Raperoga.