QAF Limited – The Positives And The Negatives From Its Latest Q2 FY17 Result

QAF Limited (SGX: Q01) is a food production company. It is involved in bakery operations, pork production, food processing and distribution, feed milling, food trading and distribution, food manufacturing, and wine distribution. In addition, the company also owns warehouses which it leases out.

Some of the more prominent brands the company has in its portfolio are Gardenia, Cowhead and Farmland.

The company has recently reported its Q2 2017 result. In this article, we will look at three particularly useful areas of information from the announcement.

Overall result

Source: QAF Limited Q2 2017 Resu lt Announcement

Overall, the profitability was down due to increased expenses in the Bakery business, lower margins in Primary Production business, due to plunging pork prices, and absence of one-off gain in disposal for the quarter.


There are a few positives that investors may want to know from the latest quarterly result.

First of all, revenue was up in the bakery segment, especially in Philippines due to new product launches and increased market penetration.

Secondly, the group improved its overall working capital during the period, with inventory and receivables down by 14% and 12%, respectively, as compared to the same period last year.

Thirdly, the company improved its balance sheet with $125.8 million in cash and equivalents and borrowings of about $97.9 million. This is an improvement from a year ago when the group had $97.1 million in cash and equivalents and borrowings of about $85.6 million.


Despite all the positives, there might be a few negative factors that investors might want to pay attention to.

First of all, cost inflation continued to be a challenge in the quarter, especially for the Bakery and Primary Production segments. Costs increased across all cost categories, including staff, repairs and maintenance, utilities and others.

Secondly, the Primary Production segment faced increased competition from the general oversupply situation in the industry and experienced significant pressure on selling prices and profit margins. This resulted in a 38% decline in earnings before interest and tax.

Last but not least, the group expects future performance to be affected by competition, currency volatility and increasing costs.


Overall, a challenging quarter for the company due to higher expenses.

Going forward, it is important that investors keep an eye on how well the company manages its operating efficiencies to counter the challenges.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.