Vitarich Corporation (PSE:VITA) reported a 47 percent drop in net income to P147.7 million in the first half of 2022 from the P276.9 million earned in the same period last year due to a surge in costs.

In a disclosure to the Philippine Stock Exchange, the firm said revenues grew 21 percent to P5.5 billion for the first half of 2022 from P4.6 billion in the prior-year period, led by its Foods business.

“We delivered record-breaking revenue performance even in the face of challenging macroeconomic headwinds,” said Vitarich President and CEO Rocco Sarmiento.

He added that, “Through volume gains, responsible price increases, and operational efficiencies, we limited the impact of higher input costs on our profitability.”

At the same time, Sarmiento said “we successfully executed on our strategic plan of growing our core. We added several key accounts to our hotels, restaurants, institutional (HRI) customer list—including some leading fast food chains—and launched our branded chicken products in various parts of the country.”

Cost of goods climbed 25 percent to P4.9 billion primarily due to higher sales volume and prices of raw materials, such as wheat, soybean, and corn, which saw an average increase of 32 percent compared to the same period last year.

Similarly, the recent surge in fuel, energy, and labor costs impacted cost of sales as well as operating expenses, which also rose 25 percent.

As a result, gross profit was P591.9 million, representing a gross margin of 11 percent compared to 14 percent in the first half of 2021, and operating profit was P241.9 million.

“We expect input costs to remain elevated as we move through the balance of the year. We are taking necessary actions to manage through the current market conditions while remaining focused on our growth plans and long-term opportunities,” said Vitarich Chief Finance Officer Melise Arnaldo.

She added that, “We are innovating, sourcing, and finding alternative raw materials when possible, while more prudently managing inventory levels, especially of imported items, in view of pressures on the foreign exchange rate and inflation impact.”