Vitarich Hits Record High Revenues of P9.7 billion in 2021
April 13, 2022– Vitarich Corporation (PSE:VITA) reports an all-time revenue record of P9.7 billion, up 23% year-over-year driven by growth in all three business segments.
“2021 not only delivered new revenue records across segments, but also pointed to higher long-term volume growth,” said Rocco Sarmiento, President and CEO. “Our strategy to expand our capabilities has been validated by market trends toward rising consumption of meat products and convenience food. This formed the basis of our recent capital investments in the business, and as a result, we have good revenue visibility going into 2022.”
Cost of goods increased 21% to P8.9 billion in relation to higher sales volume and prices of raw materials such as wheat, soybean, and corn which rose by an average of 12% compared to the prior year. The cost inflation was due to several factors, including logistics challenges due to COVID-19, reimposed series of quarantine measures in the third quarter, as well as supply disruptions for soybeans in the fourth quarter due to high demand from China, increasing domestic use in the U.S., and lower output from Brazil and Argentina.
Gross profit was P856.3 million, up 50% from a year ago, while operating income more than doubled to P184.0 million.
Operating expenses were maintained at 7% of revenues even as administrative and selling and distribution costs increased to ensure current and future market competitiveness and to support marketing activities for the recently launched Freshly Frozen line.
Net income was P89.4 million and earnings per share was P0.029, higher by nearly 10 times from P9.3 million and P0.003 in 2020, respectively.
Capital expenditure totaled P117.7 million, primarily for the construction of a new warehouse in Davao and for additional machinery and equipment in Bulacan, Iloilo, and Davao to meet strong volume demand and to upgrade bagging lines for automation.
Segment Highlights
- Revenues from the Feeds segment, which accounted for 48% of total sales, were up 14% to 7 billion with volumes reaching the highest levels ever for tie-up and commercial customers, such as distributors and direct farms. Sales volume climbed 12% while average selling prices inched up modestly by 3%. Earlier in the fourth quarter, Vitarich Poultry Advantage was launched to address the needs of backyard and general poultry farmers. The new product line attracted an initial user base of over 100 retailers and farms.
Annual feed mill capacity increased 3% to 300,200 MT in 2021 from 290,800 MT in 2020,
while production grew 8% to 226,900 MT from 209,700 MT. As of December 31, 2021, utilization rate rose to 76% from 72%.
The Feeds segment produces and markets animal feeds, health and nutritional products, and supplements to various distributors, dealers, and end users nationwide.
- Revenues from the Foods segment, which accounted for 44% of revenues, accelerated by 36% to 2 billion due to a 21% increase in sales volume and 12% increase in average selling prices. During the year, the segment further developed Cook’s portfolio by customizing Cook’s Premium Chicken products for hotels, restaurants, institutional (HRI) clients that now account for 55% of Foods revenue contribution from 33% a year ago. In addition, it also strengthened the branded retail business through Cook’s Freshly Frozen, which saw total volume soar by 608%.
Annual dressing plant capacity increased 5% to 79,000 MT in 2021 from 75,500 MT in 2020, while production expanded 21% to 35,700 MT from 29,500 MT. As of end-2021, utilization rate reached 75% from 70%, excluding dressing plant facilities owned by third parties.
The Foods segment sells chicken broilers, either as live or dressed, to HRI customers, supermarkets, and wet markets.
- Revenues from the Farms segment, which accounted for the remaining 8%, registered a 19% increase to 0 million. Fair value adjustments on biological assets amounting to P55.1 million was recognized as part of revenues and P78.0 million as part of cost of goods.
The Farms segment is involved in the production of day-old chicks and pullets.
Outlook
“We continue to execute on the factors we can control, including new products, improved customer satisfaction scores, enhanced processes, and engaged stakeholder relationships.
Looking ahead, we expect revenues to stay robust, but the ongoing challenges will temper the full impact of sales growth on our earnings. Supply chain headwinds will persist and pressure our costs in raw materials and transportation. In view of these elevated input costs, we will continuously reconfigure our purchasing approach and explore new grain and protein sources to reduce dependency on corn, wheat, and soybean meal. We are positive that higher volumes, cost efficiency, and responsible price increases will help us meet our performance objectives while ensuring that our products remain affordable.”
ABOUT VITARICH CORPORATION
Vitarich Corporation (PSE: VITA) is a pioneer, agribusiness partner, and leader in the animal feeds industry in the Philippines since 1950. Recognized with international standards for sanitation, food safety, and quality, VITA operates in three primary industry segments: feeds, foods, and farms—forging livelihoods and nourishing lives. For more information, visit www.vitarich.com or contact ir@vitarich.com