KUALA LUMPUR (Aug 30): Malayan Flour Mills Bhd posted a net loss of RM1.97 million in the second quarter ended June 30, 2023 (2QFY2023), compared with a net profit of RM31.65 million a year earlier, due to lower profit contributions from the flour and grain trading segment and equity accounted joint ventures.

This is the group's first loss in three years, after reporting a net loss of RM4.48 million in 2QFY2020.

Quarterly revenue rose 13.76% to RM752.75 million, from RM661.68 million in 2QFY2022, driven by higher sales recorded in the flour and grain trading segment.

In a bourse filing, the group said the flour and grain trading segment's operating profit declined 78.2% to RM7.2 million, from RM33.1 million previously, dragged by higher input costs, coupled with the weakening of the ringgit and Vietnamese dong in foreign exchange translation, which were partially set off by an increase in selling prices.

The group's equity accounted joint venture, PT Bungasari Flour Mills Indonesia, posted a share of loss of RM800,000, compared with a share of profit of RM8.8 million previously, due to lower contribution margin with an increase in input cost and higher realised foreign currency losses arising from the weakening of the rupiah. 

Another equity accounted joint venture, Dindings Tyson Sdn Bhd, also posted a lower share of profit of RM5.6 million, down from RM14.5 million in 2QFY2022, due to lower sales volume and contribution margin from higher input costs, lower subsidy income, partially set off by lower fair value loss on biological assets.

Additionally, its earnings were impacted as net interest expenses more than doubled to RM9.5 million from RM4.7 million previously as a result of higher interest rates.

Malayan Flour Mills declared an interim dividend of 1.5 sen per share, payable on Sept 29. 

For the first six months of FY2023, the group's net profit fell 83.69% to RM8.48 million from RM51.96 million in the previous January-June period, despite revenue rising 21.82% to RM1.58 billion from RM1.3 billion.

On prospects, the group said the persisting macroeconomic and geopolitical uncertainties continue to have a prolonged impact on the commodity prices of wheat and grain.

“The recent withdrawal of the Black Sea grain deal in July resulted in a temporary spike in global grain prices as the Black Sea grain deal plays a significant role in global food price stability.

“On the other hand, the unpredictable weather patterns across wheat planting regions such as dry conditions and heat waves are expected to affect the overall wheat supply in the market,” it added.

Against this backdrop, the group said it will continue to monitor the impact of commodity prices arising from the global supply and demand dynamics and adjust selling prices accordingly while diversifying its sources of wheat, corn and soybean meal.

Similarly, the group's poultry industry was impacted by global macroeconomic and geopolitical uncertainties.

Although the demand for domestic broilers is expected to remain high, the group said the volatility of raw material cost has made the poultry industry more challenging.

Shares of Malayan Flour Mills settled down one sen or 1.55% at 63.5 sen on Wednesday, bringing the group a market capitalisation of RM649 million. Year-to-date, the stock has fallen 16%.