KUALA LUMPUR (May 17): Malayan Flour Mills Bhd (KL:MFLOUR) said its net profit has more than tripled for the first quarter from a year earlier, thanks to higher margins in its flour and grain segment from lower wheat prices.

Net profit for the quarter ended March 31, 2024 (1QFY2024) totalled RM37.9 million compared with RM10.4 million in the same period a year earlier, MFM said in an exchange filing. Revenue for the quarter however declined by 9.1% year-on-year to RM751.6 million from RM826.69 million due to lower sales volume.

Looking ahead, MFM said evolving geopolitical tensions and unpredictable weather conditions are likely to impact the commodity prices of wheat and grain but it will adjust selling prices accordingly and diversify the sources of wheat, corn and soybean meal.

The company now said it plans to invest RM100 million to install a new flour milling line with a capacity of 600 tonnes per day in Lumut, after seeing improved utilisation rate in its operations in Malaysia and Vietnam.

The flour and grain trading segment generated an operating profit of RM51.4 million in 1QFY2024, nearly tripled from RM18.4 million in 1QFY2023. The company also booked RM7.6 million as its share of profit in joint venture PT Bungasari Flour Mills Indonesia compared to RM8.6 million loss last year.

For its poultry integration segment, MFM reported a share of loss of RM1.2 million in its joint venture Dindings Tyson Sdn Bhd in 1QFY2024, compared to a share of profit of RM15.3 million in 1QFY2023.

The swing was attributable to the ongoing boycott of its quick service restaurant clients of Western brands and the discontinuation of chicken subsidy.

In November 2023, the government discontinued subsidies and price controls on chicken. Nevertheless, MFM said the decision is a positive development for chicken producers once the supply and demand for poultry reaches a balance.

MFM also said it will also identify new markets both locally and internationally to sell its processed chickens.

According to MFM, its unit Dindings Tyson plans to spend RM200 million to upgrade and expand its breeder farms and to invest in poultry processing plant automation.

The goal is to increase the processing capacity by more than 20% to 340,000 birds per day, subject to the business sentiment of the poultry market, especially the quick service restaurant sector.

Overall, MFM expects to turn around for the financial year ending Dec 31, 2024 (FY2024) from a net loss of RM6.68 million in FY2023 when it suffered lower margins.

Shares of MFM were up 1.5 sen or 2% to 76.5 sen at Friday’s market close, valuing the group at RM948 million, ahead of the result announcements. Year to date, the counter has climbed 13 sen or 19.5%.