KLANG: Integrated poultry company Lay Hong Bhd is mulling over price increases for all its products to counter a weakening ringgit and rising operating costs.

Its executive director Yap Chor How said a stronger US dollar had resulted in a higher importation cost for poultry feed such as corn.

“Of course it (the stronger US dollar) will affect us, but it is not so significant this year,” he said, adding that raising the prices of the group’s products is one way of dealing with this.

Yap was speaking at a press conference after unveiling five variants of “Nippon premium NutriPlus” frozen processed chicken products yesterday.

The products — Chicken Karaage, Chiki-Chiki Bone, Amakaraage, Tebamoto Amakaraage and Chicken Menchi Katsu — are priced between RM10 and RM13 and available in major hypermarkets.

They are manufactured by a new joint-venture (JV) company, NHF Manufacturing (M) Sdn Bhd, in which Lay Hong has a 49% stake and NH Foods Ltd the remaining 51%.

On a separate matter, Yap said Lay Hong aims to double its monthly processed food output capacity to 4,000 tonnes as it prepares to tap into export markets to grow earnings.

He said within the first quarter of next year, the group will embark on the construction of a new factory, with an expected capacity of 2,000 tonnes of processed food, at a site adjacent to its current factory in Tanjung Karang, Selangor.

Lay Hong has set aside capital expenditure of some US$10 million (RM45 million) to build the new plant, he said.

“It will be constructed in two phases, with the targeted completion date for phase 1 by [the] end of 2018 and phase 2 by [the] end of 2019,” he said.

According to Yap, the current plant, with a monthly capacity of 2,000 tonnes of processed food, was running at 70% utilisation. “We expect the current plant to run at full capacity when the new plant is fully completed by 2019,” he said.

The new plant would have a monthly capacity of 2,000 tonnes, which would bring Lay Hong’s total capacity to 4,000 tonnes.

With the completion of the new factory, Yap expects the new JV company to contribute significantly to the group’s bottom line for the financial year ending March 31, 2019.

Yap said Lay Hong’s processed food products are mostly for the Malaysian market at the moment. Via 49%-owned associate NHF Manufacturing, Yap said Lay Hong aims to export halal frozen food to Middle Eastern countries, Singapore and Japan.

“Currently, the plants are mostly catering to the local market. We have plans to export these (frozen food) products produced at both plants,” said Yap.

Meanwhile, NH Foods executive officer of overseas business division Hideki Fujii said the company plans to export the products to neighbouring countries before introducing them in the Middle East by 2020.

“We are also looking to export our products to Japan as soon as possible” by leveraging on Malaysia’s halal certification and NH Foods’ network and expertise, he said.

Shares in Lay Hong closed unchanged at 80 sen yesterday, valuing the group at RM493.09 million.