KUALA LUMPUR (Feb 26): Egg producer Lay Hong Bhd said on Monday its net profit jumped nearly eight times for the third quarter ended Dec 31, 2023 (3QFY2024) from a year earlier, as government subsidies helped offset a decline in sales.

Net profit stood at RM54.91 million, including subsidies, compared with RM6.96 million for the same period a year earlier, Lay Hong said in an exchange filing. Revenue for the quarter, meanwhile, was slightly lower year-on-year at RM266.7 million, from RM267.16 million previously.

“Moving forward, the industry [remains] challenging, due to continuous importation of frozen chicken into the domestic market,” Lay Hong warned, flagging pressure from a weakening ringgit against the US dollar, despite declining feed cost.

The company did not declare any dividend for the quarter.

In terms of segments, revenue from integrated livestock farming decreased by 24.38% to RM219.25 million, due to lower eggs sales volumes from lower production of eggs.

Food manufacturing revenue, however, was 3.8 times higher at RM138.54 million, due to higher volumes of primary processed and further processed poultry products. The company’s retail business, meanwhile, saw its revenue falling 13% to RM56.56 million, due to lower sales quantities.

For the cumulative nine months ended Dec 31, 2023 (9MFY2024), Lay Hong reported a fourfold jump in net profit to RM62.95 million, from RM14.95 million a year earlier. Revenue slipped 4% to RM768.73 million, from RM800.47 million previously.

Lay Hong remains positive that the group will remain profitable due to diversification into further processing and liquid egg production, it said, noting that downstream activities contributed 34% of revenue, compared with 25% for the previous year.

“Going forward, the group is expected to achieve greater efficiency in food manufacturing through production integration”, with the recent acquisition of the remaining 51% stake in Nutriplus Food Manufacturing Sdn Bhd, Lay Hong added.

At the time of writing on Monday, shares in Lay Hong had fallen two sen or 5.1% to 37 sen, valuing the company at RM274 million on Bursa Malaysia, ahead of the results announcement.