Lay Hong posts 63% drop in 3Q profit on lower sales, retail closure

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KUALA LUMPUR (Feb 25): Poultry and egg producer Lay Hong Bhd's third quarter net profit declined 63% to RM3.75 million, from RM10.11 million a year ago, due to lower sales and the closure of a retail outlet.

Revenue for the quarter ended Dec 31, 2018 stood at RM203.32 million, down 10.9% from RM228.19 million previously.

In an exchange filing today, Lay Hong attributed the decrease in revenue in its integrated livestock business to a lower quantity of processed chicken products sold.

Lower revenue was also recorded at the group's retail supermarket segment, due to the closure of one of the retail outlets in Papar, Sabah, the group said.

For the cumulative nine-month period, Lay Hong remains in the red with a net loss of RM4.93 million, compared with a net profit of RM26.70 million in the previous corresponding period.

Contributing to the red figures was the net loss recorded in the second quarter ended Sept 30, 2018, the group's first loss-making quarter in 2½ years.

Nine-month revenue fell 4.3% to RM589.61 million from RM615.78 million previously.

For the next few months, Lay Hong expects average egg price to remain at the current level.

"The joint venture company with NH Foods Ltd has commenced production and is progressively ramping up production to its planned level within the next few quarters.

"Of late, the US dollars against the ringgit has shown sign of easing and this scenario will augur well for the group's major raw materials of corn and soya bean usage," it said.

However, the group said the full commissioning of its liquid egg plant in Johor has been delayed slightly due to "unavoidable technical issues". Lay Hong first announced investing in the facility about a year ago and has said its set-up will cost RM16.59 million.

Shares in Lay Hong fell four sen or 8.33% to close at 44 sen today, after 21.40 million shares crossed, valuing the group at RM290.53 million.