Vitarich Corporation (VITA), a poultry integrator and manufacturer of animal feeds and food products, reported that its net income surged 5.5 times to P167 million in the first half of the year despite lower revenues.

In a disclosure to the Philippine Stock Exchange (PSE), the firm said its revenues dipped 3.1 percent to P6.13 billion from the first half of 2023 due to a decline of P506.1 million in the feeds segment, partially offset by an increase of P213.1 million in the foods segment.

The decline in the feeds segment resulted from dampened demand for hog and poultry feeds, while the strength in the foods segment was fueled by volume gains but tempered by muted price trends.

“Our priorities are to gain scale and pursue opportunities to drive profitable growth. Our first-half performance reflects this and shows that we are on the right track with our long-term strategy,” said Vitarich Chief Executive Rocco Sarmiento.

He added “in the second half, we expect the expanded distribution of Cook’s to boost the brand’s presence and enable retail demand. We will also launch innovations for consumers to enjoy diverse and unique culinary experiences.”

First half gross profit jumped 55.3 percent to reach P705.3 million year-on-year, resulting in a gross margin of 11.5 percent, up 433 basis points versus the prior year period. 

The growth was driven primarily by improved input costs—with average raw material costs reduced by about 10 percent—and higher productivity from farm efficiencies.

Operating profit almost tripled to P238 million, with operating costs kept at 7.7 percent of revenues. Total administrative, selling, and distribution expenses inched up 18.6 percent mostly from transportation and handling, labor related to marketing and increased number of employees, as well as other professional fees.

Foods comprised 58.5 percent of revenues from 53.4 percent in the first half of 2023. Segment revenues of P3.59 billion rose 6.3 percent as sales volume expanded 9.1 percent, led by faster growth in Visayas. 

The increase was partially offset by weaker average selling prices, which dipped 3.9 percent year-on-year but improved 6.1 percent from the three-year low in the prior quarter when there was a surplus of chicken in the market.

Feeds accounted for 36.9 percent of revenues from 43.7 percent in the first half of 2023. Segment revenues of P2.26 billion contracted 18.3 percent due to a decrease in sales volume of 17.6 percent, particularly in Luzon. 

The continued spread of African Swine Fever and low farm gate prices of chicken in the first quarter were the major factors that dampened feed demand.

Farms accounted for 4.6 percent of revenues from 2.9 percent in the first half last year. 

Segment revenues of P281.4 million climbed 52.3 percent largely on fair value adjustment on biological assets amounting to P89.8 million, which is based on the estimated selling prices at the end of the reporting period.