Malayan Flour Mills aims to be a regional food producer

by asiafoodbeverages
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Malaysia’s 2nd largest flour miller, Malayan Flour Mills Bhd (MFM), is aiming to become a major regional food producer. In 1983, it diversified into the poultry industry in 1983 and now, it is looking at aquaculture as its next business.

In the long term, MFM hopes for its business to revove around 3 major pillars namely flour milling, poultry integration and aquaculture integration.

Presently, the contribution from the aqua feed segment is still negligible. Currently, the flour and grains trading segment, which has flour milling operations in Malaysia, Vietnam and Indonesia, continues to be the company’s main driver of top-line growth. MFM is set to spend RM90 million (US$20 million) in capital expenditure (capex) this year on its flour milling business in Malaysia and Vietnam.

MFM, especially its poultry business, was earlier impacted by the pandemic but in April 2022 it experienced a turnaround, largely due to its divestment of a 49% stake in its poultry business to US-based Tyson International Holding Co for RM420 million (US$93.7 million) in mid-2021.

Meanwhile, its joint-venture Dindings Tyson Sdn Bhd (DTSB) recorded strong profit in 2022 compared to loss recorded a year earlier. MFM attributed DTSB’s turnaround to higher product pricing along with better sales mix, chicken subsidy from the Malaysian government, higher plant utilisation due to increased supply to manufacturers such as Tyson’s MacFood Services (M) Sdn Bhd, and improved farm performance.

MFM has ample room for growth as its poultry processing plant is readily scalable to accommodate 340,000 broilers per day. In addition, the poultry processing plant has been granted the Investment Tax Allowance by the Malaysian Investment Development Authority under the Halal incentive scheme.

MFM’s partnership with Tyson has accelerated capacity utilisation at its primary processing plant in Sitiawan and it has sped up the turnaround plan for its poultry integration business. Since the Tyson tie-up, the JV company has continued to undertake modernisation of its upstream farming operations, as well as increased sales volume to MacFood. The partnership has also reduced the group’s exposure in the live bird market, where prices and profit margins are a lot more volatile than those of processed chickens. MFM will continue to focus on growing its market share in the QSR segment.

MFM has no plans presently to pursue mergers and acquisitions following the JV with Tyson. It aims to maximise its growth via the existing partnership, leveraging on Tyson’s exposure in Singapore and the Middle East.

Meanwhile, MFM is in the process of setting up a new poultry processing plant for the export market at an investment of RM200 million (US$45 million). It will be built on its old plant site together with the primary processing plant on a huge 32 acre site.

For its flour business, demand is expected to remain elevated. Presently, per capita consumption of flour is 16-18kg in Vietnam, 28kg in Indonesia and 40kg in Malaysia. The performance of this segment also depends on uncontrollable factors like climate which will affect supply of raw materials like wheat, which will will ultimately affect the cost of flour production.

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