Poultry Producer World Class on both Profitability and Growth
Watch the video with Andrew Stotz or read a summary of World Class Benchmarking on PT Japfa Comfeed Tbk.
Background
PT Japfa Comfeed Indonesia Tbk is the second-largest poultry feed producer in Indonesia with a 22% market share.
The company is involved in all stages of chicken processing, ranging from farming to product distribution.
It also has operations in beef and fish, including production of related food products for consumers and the export market.
Business Description
JPFA, the second-largest feed and day-old chicks (DOC) producer in Indonesia has five divisions, the biggest of which is chicken feed, which contributes 44% of total company revenue.
The second division is broilers, or processed chicken, which makes up 29% of sales. DOC is 11%, and the remaining 16% comprises aquaculture, cattle and beef.
The integrated poultry business altogether accounts for 85% of the company’s total sales, and chicken feed contributes over 90% of overall operating profits. JPFA needs to continue growing its DOC business, however, as farmers will usually buy chicken feed from their DOC suppliers. DOC suppliers are licensed and controlled by the Indonesian government.
The fish and cattle divisions are devoted to farming and processing related products for consumer use.
KKR, a global investment firm with USD $130 billion assets under management and deep agriculture expertise in Asia, has acquired 12% of JPFA’s shares in the second quarter of 2016 and should provide fresh and effective solutions to JPFA in the future.
Leadership
Before serving in his capacity as President Commissioner at Japfa Comfeed, Syamsir Siregar served in the Indonesian military for more than 30 years.
President Director Handojo Santosa began his career with the company in 1986 as a manager in the edible oil division. He has gained extensive experience by holding various positions including in the poultry feed, breeding and processing and aquaculture divisions.
He has led Japfa since 1997. In particular, he oversees operations of the Aquaculture Division, the Beef Cattle Division, the Trading Division and Internal Audit.
World Class Benchmarking
Profitable Growth increased to #1 from #7 during the last year. It seems KKR knew a good thing when they saw it!
Japfa now ranks among the best 59 of 590 large Consumer Staples companies worldwide.
Both Profitability and Growth improved to World Class during 2016. This is very impressive since both categories were severely below average as recently as 2014.
The company also saw a massive improvement in Profit Margin, jumping from #7 in 2015 to #2 in 2016.
Growth was driven by both Sales growth and Margin change.
Would you invest in Japfa Comfeed Indonesia?
If you like our research, share it with your friends.
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.