Malaysia-based poultry integrator, Lay Hong Berhad (Bhd.) is forecasting a significant improvement in its financial performance for the fiscal year ending in March 2019.
According to executives addressing a press conference recently, the main contributor to better earnings is a new poultry processing plant, which is a joint venture with NH Foods (NHF) of Japan, reports The Star.
The two companies reached an agreement in May 2016, and construction of the new facility is due to start in the first quarter of this year at Kapar in the state of Selangor.
Speaking at the launch of five new NutriPlus frozen chicken products, Lay Hong Group executive director, Yap Chor How, said the new plant, operating as NHF Manufacturing Sdn Bhd (NHFM), will have an initial output of 2,000 metric tons (mt) of processed products per month.
“Part of the capacity produced at the new plant will be exported to Japan, Singapore and Middle Eastern countries, leveraging Malaysia’s halal certification and NHF’s network and expertise,” said Yap.
According to his forecast, Lay Hong’s market share in the processed food and ready-to-eat food segments will rise from the current six percent to exceed 10 percent after 2018. This growth will result from the region’s growing population and demand for chicken and eggs.
Egg production to increase
Lay Hong is set to increase egg production from 1.8 million to three million eggs per day, according to the latest report in The Star, while its chicken production will rise from 1 million to 2 million birds per month. To meet this expansion, Lay Hong will construct four new egg production plants and three new broiler processing plants.
Other financial factors
At the same product launch event, Yap said the strengthening U.S. dollar has increased the cost of imported goods, such as corn for poultry feed, reports The Edge.
He added that Lay Hong Bhd. is considering raising the prices of its products in response to the weakening ringgit and higher operating costs.
In November, The Edge reported that in the second quarter, Lay Hong’s net profit dropped 59 percent to MYR3.54 million (US$788,000) from MYR8.56 million the same period of 2015. The company attributed the fall in profit to a gain on disposal of a subsidiary company recorded in the previous year, as well as expenses arising from the new product launches.
Owing to higher production and improved prices of egg sales, revenue for the latest quarter was up 4 percent at just under MYR171 million.
According to its website, Lay Hong Bhd. currently has eight layer farms, 14 broiler farms, three hatcheries, four breeder farms, two feed mills, an egg tray plant, two chicken processing plants, a liquid egg plant, four organic fertilizer processing plants and 10 supermarkets stores. Annual production includes 500 million eggs, 30,000 mt of chicken meat, around 5,000 mt processed poultry meat products, and 4,000 mt pasteurized egg products. Additional output includes 18,000 mt organic fertilizer.
