CCK reaps rewards of Indonesian acquisition

KUCHING: CCK Consolidated Holdings Bhd’s newly acquired Indonesian shrimp firm and the robust sales of in-house processed chicken products in Indonesia have bolstered the group’s overall sales and profitability.

PT Bonanza Pratama Abadi, which CCK acquired for RM33.8mil in July last year, has driven up the group’s prawn segment revenue by 500% to RM23.2mil in the January to March 2023 quarter (1Q23) and pre-tax profit to RM2.3mil from RM200,000 in 1Q22.

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.

CCK, an integrated poultry firm, said the contribution from PT Bonanza boosted the group’s prawn segment overall profitability as export volumes to Japan, Taiwan, Australia, South Korea and Hong Kong increased.

The segment also benefitted from economies of scale post-acquisition, which has led to a more efficient cost structure.

CCK’s group managing director Tiong Chiong Hiiung said 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.

Also reporting a strong performance is the group’s Indonesian manufacturing operations in Pontianak, west Kalimantan (neighbouring Sarawak), and Jakarta, with its sales climbing 9.3% to RM48.2mil in 1Q23 from RM44.1mil in 1Q22.

CCK attributed the impressive performance to higher overall sales volumes as a result of robust demand for CCK’s own in-house brands of sausages, nuggets and other processed products.

Under its expansion exercise, CCK commissioned a new manufacturing complex, which houses a chicken abattoir, a cold room and downline food processing of sausages, burgers and meatball in 2021.

The new facility has boosted the production of sausages, the group’s best seller in Indonesia, to cater for the increasing demand.

“On the Indonesian front, we are increasingly optimistic as the demand for our in-house manufactured brands of sausages and nuggets continues to be robust.

“Further expansions and capital expenditure (in Indonesia) will be invested when required to remove production bottlenecks as demand catches up with production capacity,” Tiong said in the company’s 2022 annual report.

All its processed products are sold via the group’s six locally partnered Freshmart outlets in Pontianak and also to third parties in Pontianak and Jakarta.

CCK group posted strong growth in its earnings in 1Q23 as group net profit surged to about RM16.2mil from RM11.1mil in 1Q22, in line with increased revenue to RM240.6mil from RM197.4mil, thanks partly to increased contributions from the Indonesian operations.

The bulk of group turnover or RM184mil was contributed by the retail segment, which recorded an 11% growth as compared to 1Q22.

The group’s current retail network in Malaysia comprises 64 CCK Freshmart retail stores, three CCK local supermarkets and six CCK wholesales stores, bringing to total 73 touch points.

Tiong said the group’s wide-reaching retail network is supported by a fully-integrated supply chain, consisting of a feed mill, layer and poultry farming and processing, prawn farming and processing and the manufacturing of house-brand food products.

“As Sarawak’s largest integrated poultry supplier, our retail networks benefits by being integrated with the poultry segment. Much like the retail network, CCK’s farm operations are also located in Sarawak and Sabah.

“On a blended basis, fresh dressed chicken and chicken parts make up approximately 20% of our retail stores’ products.

“The other 80% of our stores’ products comprise house-brand and third party frozen products, seafood products, fresh fruits and vegetables,” he added.