Sri Lankans cut chicken consumption as inflation and taxes eat into disposable incomes 

The decline in poultry feed related revenues and the demand for chicken in the final three months of last year has weighed on the top and bottomlines of Ceylon Grain Elevators PLC. 
The group which is engaged in feed milling, hatchery and sale of chicken reported revenues of Rs.3.14 billion in the three months to December 2022, the company’s fourth and final fiscal quarter, down 36 percent from the same period a year ago. 

The company said the feed revenues were affected by the curtailment of feed production due to shortage of imported raw materials, both as a result of the foreign exchange crunch and the shortage of local raw materials due to poor harvest. 

Meanwhile, the demand for chicken weakened in the final three months, despite it being the year-end festive season. This was despite the company’s revenues improving in the first nine months. 

“The revenue from chicken improved during the first nine months with the increased prices and sustained demand,” said Cheng Chih Kwong Primus, company’s Chief Executive Officer.
“However the demand for chicken declined in the final quarter due to inclement weather and the effect of increased inflation levels that created pressure on disposable incomes of customers. This was further exacerbated by the increase in the VAT which affected affordability of products creating a decline in demand,” he said. 

As the December quarter earnings season is coming to a close, companies have shown mixed results, but largely coming in at lower. 

According to analysts who closely watch corporate earnings, the corporate profits are expected to pick up from the third quarter this year with rising hopes of an economic turnaround as the Sri Lankan economy is making progress with tough reforms in place.   

The producer of Prima branded chicken and animal feed reported earnings of Rs.15.59 a share or Rs.935.4 million for the October – December 2022 period, fairly stable from a year earlier period. 

“The profitability of the group was affected by the increase in prices for both imported and local raw materials, packing materials, freight costs, and the overall increase in production overhead cost,” Primus said. 

The company suffered a massive realised exchange loss of Rs.5.13 billion in its annual performance as a result of over 80 percent decline in the value of the rupee against the US dollar.
The group subsidiary, Three Acre Farms PLC is the market leader for broiler and Day Old Chicks.

Prima Limited of Singapore has 45.45 percent stake in Ceylon Grain Elevators while the Employees’ Provident Fund has  8.92 percent stake being the second largest shareholder.