KFP 1Q earnings halve on restrictions on consumer activity, higher costs

Kicking off the June quarter earnings season, Keells Food Product PLC (KFP) reported lower earnings for the three months ended in June 30, 2021 (1Q22), largely due to the lockdown effect on consumer spending. 

KFP, as Sri Lanka’s largest processed meat producer, reported revenues of Rs.887.5 million for the quarter under review, up 31 percent year-on-year (YoY) predominantly on lower base effects. 

In the company’s fourth fiscal quarter ended in March 31, 2021 the sales soared to Rs.1.04 billion as it rode on robust consumer demand for processed foods that continued in the lead up to the New Year holidays. 

In a reflection of higher input prices, the firm’s cost of sales rose 35 percent YoY to Rs.673.9 million, which weighed on margins.

KFP Chairman Krishan Balendra in his annual review released in May said the company had faced challenges in sourcing key raw materials such as chicken and pork, stemming from import restrictions on animal feed which led to the increase in production costs. The depreciating rupee had also added to these woes. 

The producer of Krest and Elephant House branded processed meat products reported earnings of 80 cents a share or Rs.20.5 for the three months under review compared to earnings of Rs.1.64 a share or Rs.41.7 million in the corresponding period of 2020. 

The John Keells Group held 89.95 percent stake in KFP as of June 30, 2021 and the company’s share ended 75 cents or 0.44 percent higher at Rs.169.75 last Friday.