KUALA LUMPUR (Aug 20): Malayan Flour Mills Bhd (MFM) has returned to the black in the second quarter ended June 30, 2021 (2QFY21), as it posted a net profit of RM128.31 million, compared with a net loss of RM4.48 million a year ago.

Its quarterly earnings were boosted by one-off gains of RM126.2 million from its divestment of 49% stake in its subsidiary Dindings Supreme Sdn Bhd for RM420 million cash. 

In a Bursa Malaysia filing, MFM said its quarterly revenue increased marginally by 9.63% to RM576.12 million against RM525.54 million previously, underpinned by higher sales recorded in both its flour and grains trading, and aqua feed milling segments. 

The group did not declare any dividends for the quarter. 

For the first half ended June 30 (1H21), the group registered a net profit of RM145.97 million against a net loss of RM21.27 million, while revenue rose slightly by 7.35% to RM1.11 billion from RM1.04 billion. 

On a quarterly basis (QoQ), MFM’s net profit swelled from RM17.66 million recorded in the preceding quarter (1QFY21), while revenue on the other hand fell by 18.7% from RM708.77 million in 1QFY21.

On the group’s outlook, MFM expects its performance in 2021 to remain profitable, despite the uncertain economic environment, volatile commodity prices, foreign exchange rates and lingering effects of the Covid-19 pandemic.

“The board looks forward to the positive effect of the partnership with Tyson International Holding Company on the poultry integration business,” it added. 

To recap, US-based Tyson Foods Inc, the world’s second largest meat processor, bought a 49% stake in MFM's subsidiary Dindings Supreme for RM420 million cash. The subsidiary is now called Dindings Tyson Sdn Bhd (DTSB). 

According to the filing, the assets and liabilities, as well as the results of DTSB, have been deconsolidated in the quarter under review.

It is worth noting that there are several milestones that MFM needs to achieve to receive the full cash proceeds. 

For a start, it will receive an initial amount of RM140 million.

However, the second instalment of RM140 million will only be paid if the poultry business achieves an Ebitda of RM141 million in FY2022. The third instalment of RM140 million will be made if the business achieves an Ebitda of RM173 million in FY2023.

MFM’s share price has retreated from the peak of RM1.01 in mid-February to a low of 71.5 sen on Tuesday (Aug 17). The stock rebounded to close at 74 sen, valuing the company at RM744.09 million.