MFM: MFM posts RM8.5m half-year net profit, declares 1.5 sen interim dividend

PETALING JAYA: Staple foods producer Malayan Flour Mills Bhd (MFM) continued to see higher input costs and stronger US dollar impacting the group's financial performance for the first half ended June 30, 2023 (H1'23).The group's net profit in H1'23 fell by 83.7% to RM8.5 million from RM52 million a year earlier, as the two factors affected both its flour and grain trading (FGT) and poultry integration (PI) segments.The subdued performance was against the backdrop of group revenue increasing 21.8% to RM1.58 billion for the six-month period, from RM1.3 billion over the same period a year ago.Group performance for the second quarter ended June 30, 2023 (Q2'23) declined to a loss of RM2 million from a profit of RM31.6 million previously, in spite of revenue increasing by 13.8% to RM752.7 million from higher sales volume and selling prices in the FGT segment.The board declared an interim dividend of 1.5 sen per share in the period just ended, in respect of the financial year ended Dec 31, 2023.Despite increases in selling prices, Q2'23 profit margins for the FGT segment were adversely affected by its operations in Malaysia and Vietnam facing challenges of higher costs of raw materials in its inventories in-hand and a stronger US dollar.Further, the group's 30% associate PT Bungasari Flour Mills in Indonesia suffered more severely from the increase in input cost coupled with higher foreign currency losses, resulting in a share of loss of RM8.8 million to the group in Q2'23 versus a share of profit of RM0.8 million in the same period last year.The negative performance of the FGT segment was however partially mitigated by the PI segment, namely Dindings Tyson Sdn Bhd (DTSB), which saw MFM earning a share of profit from its 51% equity stake of RM5.6 million in Q2'23, down 61.4% from RM14.5 million previously due shortage of boiler supply and lower contribution margin from higher input costs and lower subsidy income, but were partially offset by lower fair value loss on biological assets.During Q2'23, DTSB recorded a revenue of RM283.9 million, increasing 6.6% from RM266.2 million previously. The lower bottom line reported by DTSB was due to the prevalence in avian disease outbreaks exacerbating the mortality of broilers, and consequently disrupted the supply to its processing plants.MFM executive deputy chairman Teh Wee Chye said: "Both our FGT and PI segments were adversely affected by a convergence of factors that has persisted in the first half of the year. Macroeconomic and geopolitical uncertainties continue to have a prolonged impact on the commodity prices of wheat and grain. The unpredictable weather pattern across the wheat planting regions is expected to affect the overall wheat supply in the market."We remain optimistic for the remaining half of the year and onwards for our PI business and will continue to invest to improve our operations," he added.