CAB to upgrade operations
Upgrading exercise to cost integrated poultry producer RM30mil
GEORGE TOWN: Integrated poultry producer CAB Cakaran Corp Bhd plans to spend about RM30mil in financial year ending Sept 30, 2019 (FY19) to expand its downstream and upstream operations.
Group managing director Chris Chuah told StarBiz that the expansion would be for its broiler farming and value-added businesses located mainly in the central and southern region of the country.
He said the group has broiler farms in 40 to 50 locations in Malaysia that are being planned for upgrading.
“The upgrading exercise will take about three years to complete and will increase our production capacity by 15%.
“It will entail the conversion of farms operating under the open house system to a closed house system,” he added.
Chuah said the group would also be on the lookout to acquire new poultry farms in the country.
On CAB’s downstream business, Chuah said it would add a production line for its cooked and value-added processed food facilities in Melaka and Singapore.
“About 20% of the products are exported to regional markets while the remaining is sold in the country.
“The domestic demand is on the rise every year, so there is a need to increase production,” he added.
According to Chuah, the group is upgrading the slaughtering capacity of its plant in Sungai Petani from the current 4,000 birds per hour to 10,000 birds per hour.
“Together with the upgrading of slaughtering capacity, the management will invest in automating most of the processes of cutting and deboning chicken into parts.
“This will help improve the overall efficiency of the plant and reduce the reliance on manual labour.”
He said CAB would make the necessary adjustments in streamlining its current resources with the view of reaping the benefits of economies of scale in its operation, and to ensure a more sustainable and consistent supply of its poultry products.
Meanwhile, Chuah said the group’s joint venture (JV) with the Salim Group to set up an integrated poultry business in Indonesia is expected to be activated in the second quarter of this year.
“CAB is hopeful that this JV would be successfully implemented, as it would have significant effect on the group’s earnings in the long run,” hesaid.
CAB’s value-added product section did not perform up to expectations in the last financial year, resulting from the high cost of production and the low productivity of older equipment.
“We will continue to upgrade our equipment and systems to improve productivity and efficiency to stay competitive.
“Newer and better-quality products would be rolled out next year to expand the range of products offered in the market.
“The value-added section is expected to show an improved performance in FY19,” he said.
According to Chuah, the group’s supermarket division is expected to experience a difficult trading environment this year due to poor market sentiment and intense competition in the retail sector.
“The group plans to open at least two new outlets in the coming year and with a bigger operating base, it is hoped that the operating cost per unit would improve.
“Our plan is to continue expanding the number of outlets in the coming years, as this is an efficient distributing channel for the group’s products,” he said.
The domestic demand is on the rise every year, so there is a need to increase production.
Chris Chuah