Malayan Flour Mills Berhad (MFM) faced less cost pressures during the third quarter ended 30 September 2023 (3Q23) but its net profit for the quarter under review is still in 47.6% weaker at RM24.2 million compared to RM46.2 million of the same quarter last year.
In a statement, the staple foods producer said it had turned around with a net profit of RM24.2 million, after seeing declining profits in the preceding two quarters.
“For the most part in the first half of the year, the group witnessed high input costs, rising interest rates, and strong United States Dollar (USD) affecting the financial performance.
“In 1Q23, the group recorded 48.6% lower net profit of RM10.4 million while in 2Q23 posting a quarterly loss of RM2 million. The turnaround was largely attributed to the group’s flour and gain trading business segment enjoying lower raw material costs of wheat and grains.
“The prices have since retreated after more than a year of turbulence caused by war, weather, and escalating energy costs,” it said as it announced 3Q23 results today (Nov 22).
For 3Q23, the reduced earnings was due to continued losses at the group’s Indonesia flour milling operations as well as the reduced profits from the Poultry Integration (PI) business.
“Revenue for 3Q23 was marginally lower at RM774.9 million, compared to RM799.5 million previously, in line with the lower selling prices for the FGT business,” it said.
MFM executive deputy chairman cum managing director Teh Wee Chye said it has seen the macroeconomic and geopolitical headwinds affecting both our FGT and PI segments easing during the third quarter, particularly from the input costs for our operations.
“The demand for our flour and poultry products remained resilient in the countries that we operate in, as we continued to ensure responsibly uninterrupted supply to the consumers.
“Under these circumstances, we saw a better profit than those of the first half. If we continue to see stability in input costs and improving supply of broilers to our poultry processing plant, we are optimistic that the two business segments will continue (the trajectory),” he said.
On a cumulative basis, the group recorded a net profit of RM32.7 million for the nine months ended 30 September 2023 (9M23), down by 66.7% lower from RM98.2 million due to reduced profitability of its FGT business.
On the performance of the PI segment, operated under the 51%-owned joint venture company Dindings Tyson Sdn Bhd (DTSB), the group saw its share of marginally lower profit at RM28.1 million for 9M23 from RM28.8 million.
“The lower earnings was due to the prevalence in avian disease outbreaks exacerbating the mortality of broilers, and consequently disrupted the supply to its processing plants.”
Teh added: “The changing geopolitical scene is a dynamic phenomenon that presents both opportunities and challenges for our industries. Despite the challenges, we anticipate optimistic performance for the rest of the current financial.”
