November 8, 2022– Vitarich Corporation (PSE: VITA) reported continued strong momentum in the third quarter, with record revenue performance despite macroeconomic uncertainties.
Revenues for the third quarter increased 17% year-on-year to P3.2 billion—its highest quarter ever. For the nine-month period, revenues grew 19% to P8.7 billion—another record, and is now poised to surpass the historical high of P9.7 billion set in 2021.
“I am pleased with our record third quarter revenues, an achievement that reflects the strength of our strategy and the execution of our committed team” said Rocco Sarmiento, President and CEO.
Cost of goods rose 19% to P7.9 billion as a result of higher sales volumes and prices of raw materials such as wheat, soybean, and corn, which surged by an average of 26%. Increases in fuel, energy, and labor costs added to cost pressures, impacting cost of goods as well as operating expenses, which rose 30%.
Gross profit grew 20% to P831.9 million and operating profit increased 5% to P276.6 million, benefiting from volume growth, pricing changes, and supply chain optimization, partially offset by sustained cost inflation and investments in technology, talent, and market-related initiatives.
Net income was P153.5 million with earnings per share of P0.05.
“We are responding to the current inflationary environment by creating value for customers, adjusting prices responsibly, and driving efficiency while also mindfully investing in growth and sustainability initiatives. Looking ahead, the fundamentals are in place for stronger margins and profitability. We are approaching 2023 with a focus on expanding our presence combined with cost discipline to perform well even if the macro backdrop continues to be volatile.”
In the third quarter, VITA further strengthened its retail presence nationwide. In Luzon, it opened 9 accounts and started to supply Cook’s branded products in select branches of Puregold and South Supermarket in the Greater Manila Area. It also increased distribution in Catanduanes and Sorsogon. In the Visayas and Mindanao, a total of 18 additional accounts were opened consisting of distributors, wet markets, and HRI customers, in addition to growing its distribution in Samar.
In November 2021, VITA announced its strategy to transition from a commodity-oriented to a high value-add business. An update on the company’s progress is provided below.
VITA added several key hotel, restaurant, and institutional (HRI) customers—including some leading fast food chains—which underscores the demand for joint product development and customization. It also invested in branding and further processing to differentiate its retail products.
As of September 30, 2022, HRI increased to 107 accounts in total, while Cook’s widened its reach and is now available in over 2,000 stores in the country.
Production capacity increased 8% to 241,800 MT for feed mills and 23% to 74,600 MT for dressing plants, while production grew 16% to 196,100 MT and 25% to 32,850 MT, respectively. As a result, utilization rates came in at 81% and 80%, excluding dressing plant facilities owned by third parties.
To secure forward raw material purchases, VITA worked with strategic alliances to bring in dry bulk commodities, aggregating its requirements with other parties to benefit from economies of scale and achieve sourcing efficiencies. By extension, the company set up and completed two warehouses in Davao primarily for the higher inventory requirement.
At the same time, it continuously optimized efficiency between different core ingredients for feeds to manage the fluctuations in prices and availability of raw materials. It also expanded its supplier base for key raw materials to maintain flexibility and price competitiveness.
VITA invested in transformative technologies and processes aimed at enhancing risk management and building relevant digital capabilities in the areas of supply chain management, innovation, brand building, and more.
Some initiatives implemented across the company include:
In Bulacan, new machinery and additional facilities for blast freezing and cold storage were installed. On the automation front, a comprehensive dressing plant management system was developed to improve the accuracy of reporting and product inventory—from receiving of live birds to inventory management and further processing.
Key to its framework for responsible production, VITA successfully renewed its ISO 22000:2018 certification on food safety for its feed mills in Pavia, Iloilo and Panacan, Davao City. The certification is valid until 2025.
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