KUCHING: CCK Consolidated Holdings Bhd group has sustained its earnings growth, with net profits surged to RM23.34 million in third quarter ended September 30, 2024 (3Q2024) from RM19.98 million in 3Q2023 as it rode on robust consumer demand for its poultry products.
This was achieved as group revenue climbed to RM259.5 million from RM251.7 million in 3Q2023.
The company’s earnings per share improved to 3.76 sen from 3.22 sen.
In the current quarter under review, CCK’s retail segment generated higher external revenue of RM199.3 million (3Q2023: RM192.2 million), poultry segment also reported higher sales of RM31.86 million (RM28.78 million) but the prawn segment posted lower revenue of RM23 million (RM25 million) whereas the food service segment also turned in decreased revenue of RM5.24 million (RM5.63 million).
In line with increased sales revenue, the retail segment posted higher pre-tax profit of RM18.67 million (RM17.99 million) while the poultry segment pre-tax profit jumped to RM7.44 million (RM3.94 million). The prawn segment also recorded improved pre-tax profit to RM4.14 million (RM3.11 million) despite lower sales whereas the food services segment pre-tax loss shrank to RM455,000 (RM499,000).
In 3Q2024, CCK said its group revenue growth was largely driven by an improved performance from the retail and poultry segments, which offset the decline in the prawn and food services segments.
“The retail segment grew 3.7% during the quarter, primarily due to matured contributions from our established retail network and robust consumer demand,” it added in explanatory notes accompanying its financial results.
The group’s retail network in Malaysia comprises 65 CCK Fresh Mart stores, six CCK wholesale stores and three CCK Local Supermarkets.
“Revenue from our Indonesian manufacturing operations (Pontianak and Jakarta) improved to RM55.2 million in 3QFY2024 compared to RM50.7 million in 3QFY2023. Sales volume remained positive, driven by strong demand for our in-house manufactured processed products.”
CCK said the group’s total poultry segment revenue climbed by 11.7 per cent to RM95.6 million in 3Q2024, with the increased sales volume driven by higher demand for poultry products from both its institutional clients and own retail stores (inter-segment sales).
The prawn segment revenue declined by 7.9 per cent to RM23 million in 3Q2024 because of lower average selling prices to key export markets whilst sales via the group’s own retail channels moderated to RM3.1 million compared to RM4.3 million in 3Q2023.
The food service segment reported lower revenue of RM5.2 million (3Q2023: RM5.6 million) due to decreased sales volume and demand from government schools in Sarawak covered under the group’s supply contracts.
In 3Q2024, CCK said the group pre-tax profit surged by RM4.7 million (18.4%) to RM30.4 million from RM25.7 million in 3Q2023, attributing the improved profitability largely to a strong performance from the poultry segment as well as the prawn and retail segments.
Notably, overall gross profit margins improved to 22.7 per cent from 21.6 per cent during the same period of comparison.
The retail segment reported a 3.8 per cent jump in pre-tax profit to RM18.7 million as a result of a more favourable product mix, positive sales volumes from the group’s its retail and wholesale channels and higher contributions from the Indonesian operations.
The poultry segment shone as its pre-tax profit soared by 88.7 per cent to RM7.4 million (RM3.9 million), largely due to effective cost control measures and a strategic alignment of the product mix coupled with a favourable movement in feed input costs, and the subsidy scheme from the federal government in relation to price ceiling for eggs.
The prawn segment saw its pre-tax profit expanded by 33.2 per cent to RM4.1 million (RM3.1 million) despite a decrease in average selling prices to export markets and lower domestic sales volumes. This was largely due to effective cost control measures leading to lower raw material costs, resulting in higher overall segment margins.
As compared to the immediate preceding quarter (2Q2024), CCK had done well in 3Q2024 as group net profit improved to RM23.34 million (2Q2024:RM19.77 million) despite drop in revenue by 4.4 per cent to RM259.5 million (RM271.6 million).
On a nine-month period in 2024 (9m2024), CCK delivered better results, with group net profit climbed to by RM11.58 million (22%) to RM64.5 million (9m2023:RM52.9 million) in line with revenue growth by RM52.4 million (7.1%) to RM791.8 million (RM739.4 million).
“Revenue growth during the period was driven by improved performances from the retail and poultry segments. Notably, higher consumer demand led to a better performance in the retail segment whilst higher demand for poultry products from both our institutional clients and our own retail stores (intersegment sales) boosted the poultry segment.
“The retail segment reported a revenue of RM611.5 million during the period, 7.7% higher compared to 9mFY2023.Growth was driven by more matured contributions from our established retail network, higher sales volume from both the retail and wholesale channels, and strong demand for our in-house manufactured processed products in Indonesia.
“Notably, our Indonesian manufacturing operations was able to cater to the strong demand due to the additional production capacity that came on stream in January 2021.Revenue from our Indonesian manufacturing operations (Pontianak and Jakarta) amounted to RM153.9 million, accounting for 19.4% of total group revenue for 9mFY2024,” said CCK.
In 9m2024, the poultry and prawn segments recorded revenue of RM284.6 million and RM70.4 million respectively whereas the food services segment generated lower revenue of RM15.7 million.
Commenting on future prospects, CCK said with the group employing a vertically integrated business model, this allows it to exert greater control over its supply chain and operations. “This integrated approach, coupled with the nature of our product offerings, gives us the ability to be agile whilst developing a commendable resilience to market fluctuations and challenges.
“Thus said, we continue to operate in a high inflationary environment, exerting pressures on costs throughout the supply chain. This inflationary trend compounds the challenges posed by fluctuating currency exchange rates and rising input costs, further straining our cost structures.
“Specifically, the volatility of the US dollar against the Malaysian ringgit remains a concern as it leads to fluctuations in prices of corn and soy. Feed prices constitute a significant portion of the poultry segment’s costs, which in turn make up about 50% of our retail segment’s sales. Consequently, we actively employ strategies to address these cost pressures, seeking efficiencies wherever possible while remaining mindful of the impact on pricing and profitability.”
CCK said the group’s focus remains on mitigating these cost pressures through prudent cost management practices, operational optimisation and strategic pricing adjustment, ensuring that it remains the group’s competitiveness in the market.
“Strategically expanding our retail network remains integral to our growth trajectory, with a concerted focus on optimising economies of scale and enhancing the efficiency of our fully integrated supply chain. This will bolster our capacity to meet evolving consumer demand while maximising operational efficiencies,” added the company.
