Tyson to buy 49% stake in Malayan Flour Mills Berhad’s poultry business even as Q1 profits plunge

MALAYSIA – American multinational food corporation Tyson Foods has agreed to acquire a 49% stake in the poultry segment of Malaysian food manufacturer, Malayan Flour Mills Berhad (MFM).

Tyson Foods, the world’s second largest processor and marketer of chicken, beef, and pork currently operates one plant and one innovation centre in Malaysia.

The new partnership will see Tyson invest in the company’s vertically integrated poultry business, which includes feed mills, hatcheries, farms and processing facilities, with the aim of increasing supply flexibility for both companies.

“Once completed, the poultry deal will optimise our existing Malaysia business and expand MFM’s poultry business,” said Chris Langholz, international president of Tyson Foods.

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“This partnership will add more supply flexibility for both companies in serving halal-certified poultry to consumers and customers in the country and across priority export markets.”

Teh Wee Chye, managing director for MFM, added: “Malaysia is one of the key poultry markets in Southeast Asia, with a high per capita consumption of poultry.

“Together with Tyson Foods, we look forward to increasing our halal poultry product offerings in the country, especially in the further processed poultry segment, as well as exporting to demand markets with the help of Tyson Foods’ global network.”

Net income for the quarter ended Jan. 2 was US$467 million, equal to US$1.31 per share on the common stock, and a decline when compared to the same period of the previous year when the company earned US$505 million, equal to US$1.42 per share.

Tyson Foods Q1 impacted by high feed costs

Meanwhile, Tyson Foods released the results of fiscal 2021 first quarter which were overshadowed by the impact high feed and freight costs may have on the business’ outlook later in the year.

The company’s management highlighted the inflationary pressures it is facing, with the spot prices of corn and soybeans rising 28% and 26%, respectively, during October 2020 to December 2020.

The company’s two business units that may be most affected are Chicken and Prepared Foods even as its refrigerated freight costs also rose 9% during the year.

Net income for the quarter ended Jan. 2 was US$467 million, equal to US$1.31 per share on the common stock, and a decline when compared to the same period of the previous year when the company earned US$505 million, equal to US$1.42 per share.

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Sales fell slightly, from US$10.8 billion during the first quarter of fiscal 2020 to US$10.5 billion this quarter.

Tyson Foods’ Beef business unit had a stellar quarter, with sales rising to US$4 billion from US$3.8 billion the year prior. Beef operating income jumped to US$528 million from US$342 million in 2020.

Mr. Glendinning said strong domestic and export demand for beef pushed up sales, and the operating income improvement was due to higher volumes as the company lapped the prior year impact of a fire at a beef plant that affected production.

“As demand gradually normalizes post-COVID, we expect higher levels of commercial spending in order to meet our category growth objectives and negative mix impacts from higher foodservice volumes,” Glendinning said.

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