KUCHING: CCK Consolidated Holdings Bhd (CCK) expects its Indonesian operations to increase contribution to group revenue with the newly commissioned chicken nugget production facilities in Jakarta.
The new line commenced production on Sept 1, this year as CCK increased its investment to expand business in Indonesia.
“With the commissioning of the nugget line, the group is optimistic that this will improve further our Indonesian operation’s contribution in the long term,” said CCK when commenting on the group’s future prospects as the company reviewed its first nine months’ performance.
According to the company, the Indonesian operations has increased its contribution to group revenue to 15 per cent from 14 per cent a year ago, brought about by improved production and sales of chicken sausages and chicken parts.
Before the group expanded to Jakarta, it also has business operation in neighbouring Pontianak, west Kalimantan.
Sibu-based CCK group’s business strength lies in its retail network of more than 50 stores in Sarawak and Sabah. Fresh dressed chicken and chicken parts make up some 60 per cent of the stores’ products while the other 40 per cent of products on sale comprised frozen chicken, table eggs as well as fresh fruits and vegetables.
The retail network, according to group managing director Tiong Chiong Hiung, is supported by an integrated poultry supply chain.
“From feed mill, hatchery, breeder, broiler, layer, slaughtering house and finally, the retail outlet, our core chicken products are all sourced internally, and we are able to ensure a consistent supply and best quality for our retail stores,” he said in the company’s 2017 annual report.
This year, CCK’s target is to expand its retail network in Sarawak and Sabah by opening up to five new stores.
Two weeks ago, wholly-owned subsidiary CCK Properties Sdn Bhd entered into a sale and purchase agreement with Fabulous Enterprise Sdn Bhd to acquire several units of shophouses, which are currently under construction, in Sungai Merah, Sibu for RM7.05 million.
The purchase consideration is financed by 25 per cent internally generated funds and 75 per cent banking facilities.
The purchased buildings with total area of about 1,460 sq m, is for the setting up of a CCK Freshmart flagship store to image the new concept store in Stutong, Kuching, according to CCK in a filing with Bursa Malaysia.
The group continues to revamp its existing retail outlets by providing comfortable shopping environment and increasing the variety of fruits, vegetables as well as small packs of meat and chicken.
To support the increasing number of retail stores, CCK is setting up new farms to raise broiler production. The group has a broiler production of some 1.3 million birds per month and a layer production capacity of 180,000 to 200,000 eggs per day.
In the third quarter ended Sept 30, 2018 (3Q-2018), CCK group revenue dipped by RM5.7 million to RM151 million from RM156.7 million in 3Q-2017 while pre-tax profit fell to RM6.6 million from RM13 million or down by 49 per cent.
However, in the first nine months, group revenue grew by about 4 per cent to RM471.2 million from RM454.9 million in the corresponding period last year. The retail and poultry segments recorded increases in turnover of RM8.9 million and RM8.1 million respectively. Group pre-tax profit rose marginally to RM30.3 million from RM28.6 million during the same period.
“Despite the continued weakening of the ringgit against US dollar, the prices of raw materials for (animal) feed have declined.
“The group is hopeful that this will result in lowering feed costs in the final (fourth) quarter (2018) and thus improve margins,” said CCK in notes accompanying its latest financials.
