CCK’S latest Indonesian acquisition bolsters business

CCK Consolidated Holdings Bhd’s newly acquired Indonesian shrimp firm has bolstered the group’s overall prawn export business.

This is evident as the group prawn segment’s revenue surged by 36% to Rm109.6mil in the financial year ended Dec 31, 2023 (FY23) from FY22.

CCK, which is Sarawak’s largest integrated poultry supplier, attributed the segment’s revenue growth to the contribution from PT Bonanza Pratama Abadi, which was acquired for Rm33.8mil in July 2022, in boosting the group’s overall prawn export volumes to Japan, Taiwan, South Korea and Hong Kong.

PT Bonanza is engaged in the processing of shrimps for local and export markets.

The firm’s key products are frozen raw shrimp, frozen cooked shrimp and frozen Nobashi Ebi shrimp.

According to CCK group managing director Tiong Chiong Hiiung, the acquisition of PT Bonanza has proven to be synergistic to CCK group’s existing seafood business and complemented its export-oriented prawn products and added size and scale to the prawn segment.

Besides the shrimp business, the group has established food manufacturing operations in Indonesia, where its factories in Pontianak, west Kalimantan and Jakarta produce in-house brands of sausages, nuggets and other processed products.

To cope with the increasing demand from consumers in Pontianak, CCK made a major investment in a new manufacturing plant and logistic centre that comprises a chicken abattoir, a cold room and downline food processing of sausages, burgers and meatballs.

The new facilities commissioned three years ago have significantly raised the production capacity and support higher sales volume.

With continued robust demand for the in-house brands of processed products sold via CCK’S locally partnered Freshmart outlets and to third parties in Pontianak and Jakarta, the Indonesian operation has recorded formidable performance and raised its revenue contribution to the group to Rm196.6mil in FY23 (accounting for 19.8% of total group revenue) from Rm169.4mil in FY22 or up by 16%.

CCK group’s revenue has expanded swiftly in the past two years to reach nearly the Rm1bil mark, driven mainly by the vigorous growth of the retail and prawn segments.

In FY23, CCK posted a 13.3% growth in group revenue to Rm994.9mil from Rm885.8mil in FY22.

The group’s net profit surged by 36% to Rm84.6mil in FY23 from Rm62.1mil in FY22 and Rm24.5mil in FY21.

Year-on-year, the retail segment’s sales rose by 8.4% to Rm872.8mil.

“Growth was driven by more matured contributions from our established retail network, higher sales volumes from both the retail and wholesale channels,and strong demand for our in-house manufactured processed products in Indonesia.

“The overall profitability of all key segments remained encouragingly robust.the retail segment continued to experience healthy sales volumes from our expansive retail network,” CCK said in a yearly review of the group’s performance recently.

In FY23, the group’s gross profit margins improved marginally to 22.9% from 21.6% in FY22.

As at end-2023, the group’s retail network in Malaysia comprised 66 CCK Freshmart stores, three CCK Local Supermarkets and six CCK wholesale stores, bringing to total 75 touch points.

For the year under review, three Freshmart stores opened for business.

According to Tiong, expansion of the group’s retail network will continue to be carried out strategically,and that economies of scale and the efficiency of its fully integrated supply chain continues to remain a key priority and focus of the group.

“Operating in the dynamic landscape of retail, we specialise in the sale of staple everyday necessities, such as poultry products, fresh fruits and vegetables.

As such, all our key business segments are linked to consumer sentiment and demand but boast a commendable resilience due to the nature of the products we offer.

“That said, the volatility of the US dollar against the Malaysian ringgit remains a concern as it leads to fluctuations in the prices of corn and soy.

This is likely to persist in FY24 and will affect the cost structures of both the retail and poultry segments,” commented CCK on the prospects for 2024.

CCK group’s latest strong earnings results have pushed its share price on Bursa Malaysia to an all-time high of RM1.05 on last Thursday (March 21), giving it a market capitalisation of Rm662.2mil.