Poultry and feeds firm Vitarich Corporation reported a 78 percent drop in net income to P40.8 million in the first quarter of 2022 compared with the same period last year, but significantly higher than the previous quarter.

In a disclosure to the Philippine Stock Exchange, the firm said it posted a 19 percent improvement in revenues to a record P2.6 billion in the first quarter this year from P2.2 billion a year earlier with growth led by the strong performance of the Foods segment.

“Two years since the pandemic began, supply chains continue to undergo significant restructuring,” said Vitarich President and CEO Rocco Sarmiento.

He noted that, “Businesses have increasingly diversified their supply chain risks. They are adding raw material suppliers to improve resilience. We are benefiting from that strategy.”

Sarmiento said “The growth in our Foods segment was driven by our hotel, restaurant, institutional (HRI) clients who have adopted enhanced risk management practices.”

“These include finding suitable suppliers and facilitating knowledge and technology transfer to strengthen their partners and in turn, their supply chains,” he explained.

Cost of goods increased 30 percent to P2.4 billion mostly from higher sales volume and prices of raw materials such as wheat, soybean, and corn which rose by an average of 29 percent compared to the year-ago period.

Gross profit came in at P241.8 million, representing a gross margin of 9 percent. The rise in raw materials cost was partially offset by a favorable product mix due to higher revenue contribution from the Foods segment, which commands higher margin.

Operating expenses increased 31 percent resulting in operating income of P74.2 million that reflects higher freight and handling cost due to fuel prices.

“In a challenging inflationary environment, we continue to monitor developments in commodity prices. Despite these headwinds, our first quarter results demonstrated our adaptability leading to market success in penetrating HRI customers,” said Vitarich Chief Financial Officer Melise Arnaldo.

She added that, “A robust foundation creates a larger potential for long-term growth, allowing us to explore investments in expansion-related projects.”

“We expect 2022 capital expenditures to be approximately P80 million, significantly reduced from prior estimates as we optimize existing resources,” said Arnaldo.