Malayan Flour Mills executive deputy chairman cum managing director Teh Wee Chye
KUALA LUMPUR: Malayan Flour Mills Bhd
(MFM) has earmarked RM300mil for capital expenditure (capex) in its financial year Dec 31, 2024 (FY24) to strengthen its growth engines.
In a statement, MFM announced that Dindings Tyson Sdn Bhd (DTSB), which oversees the poultry integration segment (PI), plans to invest up to RM200mil in capital expenditures for FY24.
The funds will be used to upgrade and expand breeder farms and further automate the poultry processing plant in Sitiawan, Malaysia.
Subject to the business sentiment of the poultry market, particularly the quick service restaurant (QSR) sector, the capex also aim to increase the processing plant's slaughtering capacity by over 20%, from the current 280,000 birds per day to 340,000 birds per day.
Seeing better capacity utilisation in its flour milling operations in Malaysia and Vietnam, MFM plans to invest RM100mil in FY24. This investment will include installing a new milling line with a 600 tonne per day capacity in Lumut, Malaysia, and adding more flour silos and blending facilities in a Vietnam plant.
MFM said the capex investment of RM300mil for both segments will be funded by internally-generated funds, as well as bank borrowings.
“We will continue to future-proof our two main businesses, with the objectives to achieve economies of scale and have two growth engines firing at same time to take the group to the next level as a leading food security player in the country.” executive deputy chairman cum managing director Teh Wee Chye said.
In the first quarter ended March 31 (1Q24), MFM’s net profit more than tripled to RM37.9mil, or earnings per share of 3.20 sen compared with RM10.44mil, or 1.02 sen in the same corresponding quarter last year.
The positive financial performance was largely attributed to the continued improvement in the flour and grain trading segment operations, which saw better profit margins from lower raw material costs during the quarter, as prices of wheats and grains eased off.
Revenue, however, was 9.08% lower at RM751.6mil versus RM826.7mil posted a year ago.
Teh said the global geopolitical events have a seesaw impact on both its flour and grain trading segment (FGT) and PI businesses.
“On one end, we are seeing the continued improvement in our flour milling operations in recent quarters, after the extreme supply uncertainties caused by the Russian-Ukraine conflict since early 2022, while on the other end, we are now facing challenges for our poultry processing business as a result of the Middle East crisis,” he said.
“It is fortunate that our FGT segment has helped mitigate the doldrums faced by our poultry business. Meantime, we will leverage on the current stable supply of grain and wheat to continue strengthening our flour milling profitability, at the same time fulfilling our social responsibility to meet the demand of the consumers in the countries we operate in by investing in additional flour milling facilities.
“As for our PI business, we remain optimistic of its resilience because consumers in Malaysia generally still have strong affinity for chicken meat. For the time being, we will identify new markets - locally and overseas, to sell our processed chickens. We will also work together with our JV partner Tyson Foods to improve both our upstream farming and downstream activities to cater to future demand,” Teh said.
