Bairaha Farms June quarter net down 18%

Sri Lanka’s poultry sector player and meat producer, Bairaha Farms PLC group saw its net profits for the quarter ended June 30, 2016 (1Q17) declining by 18 percent to Rs.118.9 million from a year, amid revenue remaining almost flat. 

The earnings per share slipped to Rs.7.43 from Rs.9.02. The performance has mainly been troubled by steep fall in the other operating incomes, which fell by as much as 91 percent year-on-year (yoy) to Rs.2.26 million. The finance cost rose 72 percent yoy to Rs.15.0 million. The group revenue has increased by only 2.0 percent yoy to Rs. 956.3 million. The gross profit however rose 19 percent yoy to Rs.257.6 million. 

The increase in taxes, rise in inflation and dim growth prospects in the economy is expected to dent consumer demand, resulting in lower demand for chicken going forward. 

In Sri Lanka, chicken has long been a price-controlled item and these maximum prices weaken the potential for industry growth. 

In a recent gazette issued listing the price-controlled items, chicken cannot be sold above Rs.410 per kilo (and Rs.495 per kilo if skinless). 

Yakooth Naleem, Bairaha Farms Chief Executive Officer sees immense potential to expand the local poultry sector as the per capita consumption poultry is around 9 kilograms – relatively low compared to most East Asian countries. 

Bairaha Farms plans to set up a commercial hatchery, which will be gradually upgraded into an automated hatchery, Naleem told in his annual review in June. 

In the same month the group completed the commissioning of a feed-mill as a joint venture. The feed-mill has enabled Bairaha Farms to have total integration in the poultry production operations. 

However, sourcing of raw materials for animal feed has long been a challenge for the company as well as the industry because animal feed has to be imported at higher prices due to delays in obtaining permits. 

“Our suggestion is to guarantee a mutually-agreed reasonable price to the local maize farmers so that the entire Maha maize crop could be purchased directly by the feed-millers. Thereafter, feed-millers should be permitted to import the balance requirement before the next Maha season, without authorities imposing any undue restrictions,” group Chairman, Prof. M.T.A. Furkhan stated. 

Meanwhile, Sri Lankan cricketer, Kumar Sangakkara has bought 0.50 percent stake in the Bairaha Farms group and featured as the twentieth largest shareholder.