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Malindo Feedmill's net profit declined by 84.6% YoY in Q1 2020

15 May 2020 07:43

JAKARTA. PT Malindo Feedmill Tbk (MAIN) booked net profit of Rp 14 billion during the first quarter (Q1) of 2020,  84.6% lower than its record in Q1 2019, due to slumping sales.

According to Emma A. Fauni, Analyst of Mirae Asset Sekuritas, the decline in sales in Q1 2020 reached 13% YoY. Unfortunately, this condition was not followed by a proportional decrease in COGS (Cost of Goods Sold). "Only 9.3% [decline of COGS], while operating costs rose by 6.8% YoY," explained Fauni in his research report.

Fauni added that the decline in sales was worsened by sales in the DOC (Day Old Chicken) segment, which experienced a decline of 29.3% YoY. Fauni said that this segment contributed as much as 16% to the company's total sales. "The price of DOC in the market dropped, making our EBIT margin depressed to -16.6%," said Fauni.

Going forward, the pressure on the prices of broiler chickens and DOC is expected to continue, because the demand for chicken on the market is still quite weak, amid slowing economic activity during the coronavirus pandemic (COVID-19). (KR/AR)

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