Staple foods producer, Malayan Flour Mills (MFM) continued its profit growth trajectory with group net profit of RM46.2 million in the third quarter ended 30 September 2022 (3Q22) compared to RM3.9 million in the previous corresponding quarter.
The growth is attributed largely to the improving operations of the Group’s Poultry Integration (PI) segment.
Under the PI segment, MFM has the largest poultry processing plant in Malaysia, boasting a slaughtering capacity of more than 280,000 birds per day.
In addition, MFM is one of the major flour millers in Malaysia, supported also by operations in Vietnam and Indonesia.
Whilst its Flour and Grains Trading (FGT) segment, together with other businesses, contributed a profit of RM33.9 million at pre-tax level for 3Q22, on the back of RM799.4 million revenue. Compared to 3Q21, the segment’s pre-tax profit grew 7.3% from the previous quarter’s RM31.6 million while revenues expanded by 28.8% from RM620.5 million previously on higher selling prices and production volume.
However, the challenging market conditions of higher raw materials costs, higher interest rates and appreciating US Dollar led to lower profit margins for the FGT segment.
Meanwhile, the PI segment, operated by the joint venture (JV) company with Tyson Foods, delivered an improved financial performance in 3Q22, after turning around only in the preceding quarter. The segment’s share of profit from its 51% equity stake came in at RM19.1 million, versus a share of loss of RM13.9 million last year.
The JV company saw a new watermark revenue of RM309.5 million in 3Q22, compared to RM186.1 million of the same quarter last year, as further penetration into higher value-added food segments such as QSR chains and Modern Trade resulted in increased meat processing volume at its Sitiawan plant.
“Our 3Q22 numbers reflect our success of having an integrated and synergistic business model of flour milling and poultry processing for the Group. Both of our business segments continue to not only feed the nation with staple foods, but also create value for our shareholders as a resilient investment case of MFM,” Teh Wee Chye, Executive Deputy Chairman of MFM said.
“We remain steadfast in improving the efficiency and capacity utilization of our flour milling and poultry processing facilities, so that we can offer our range of food products at an uninterrupted pace to our clientele and ultimately the end-consumers at affordable prices, especially in light of the current inflationary pressure,” Mr Teh added.
“Going forward, the flour milling business will continue to sustain our earnings, while the poultry integration segment is expected to enhance profit contribution to MFM as we accelerate the capacity utilization at our primary processing plant,” Teh remarked.
MFM has a state-of-the-art poultry processing plant in Sitiawan, Malaysia, which is fully integrated with the entire value chain from raw materials procurement to feed mills, hatchery, and breeder and broiler farms.
MFM owns one of Malaysia’s biggest closed-house broiler farms; the processing plant gets its broiler supply internally as well as from external farms.
Its PI segment supplies processed meat to all leading QSR chains, major supermarket chains, and food manufacturers.
In May 2021, Tyson Foods, the world’s leading meat processor and marketer, invested in a 49% equity stake of the JV company that operates MFM’s PI segment. The partnership aimed to leverage on Tyson Foods’ extensive global network, proprietary technology, and market reputation to increase sales volume, venture into export markets and improve operational efficiency.
For first nine months ended 30 September 2022 (9M22), the Group recorded 53.1% higher net profit from continuing operations of RM98.2 million from RM64.1 million previously, net of the RM85.8 million disposal gain in 9M21. Group revenue for 9M22 rose 21.0% to RM2.1 billion, versus RM1.7 billion last year.
MFM will not declare any dividend in respect of the quarter review
Thus far, the Company has paid out an interim dividend of 1.5 sen per share on 23 September 2022, in respect of the financial year ending 31 December 2022.
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