Malayan Flour Mills net profit jumps 12-fold in 3Q22

STAPLE foods producer, Malayan Flour Mills Bhd (MFM), posted a net profit of RM46.2 million in the third quarter ended Sept 30, 2022 (3Q22) compared to RM3.9 million in the previous corresponding quarter, attributed largely to the improving operations of the group’s Poultry Integration (PI) segment.

For 3Q22, the group’s Flour and Grains Trading (FGT) segment, together with other businesses, contributed a profit of RM33.9 million at the pretax level, on the back of RM799.4 million revenue.

Compared to 3Q21, the FGT segment’s pretax 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, it said, the challenging market conditions of higher raw materials costs, higher interest rates and the 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 Inc, 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 in 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,” MFM executive deputy chairman Teh Wee Chye said in a statement today.

He said the group remains steadfast in improving the efficiency and capacity utilisation of its flour milling and poultry processing facilities so that it can offer its range of food products at an uninterrupted pace to its clientele and ultimately the end-consumers at affordable prices, especially in light of the current inflationary pressure.

“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 utilisation at our primary processing plant.”

For the nine months period, the group recorded 53.1% higher net profit from continuing operations of RM98.2 million from RM64.1 million previously. Group revenue rose 21% to RM2.1 billion, versus RM1.7 billion last year.

In a filing to Bursa Malaysia, MFM expects to remain profitable for the current financial year but anticipates challenges in the remaining months of 2022 amid macro uncertainties.

It said the prices of wheat are expected to stay elevated into 2023 due to global weather challenges, even as some commodity prices are beginning to stabilise.

In addition, it said rising inflation and the weakening of the ringgit in the face of a strong US dollar will further compound the cost pressure.

Given these pressures, the group’s flour operations in Malaysia and Vietnam are expected to be impacted. — TMR