June 12, 2007

KFC Malaysia investing US$7.2 million in poultry plant to diversify supply

Malaysia's KFC Holdings Bhd is investing RM 25 million (US$7.2 million) in a third poultry processing plant in Johor.

The proposed plant, to be financed by internally-generated funds, would supply the group's restaurants and serve as an alternative contingency supply when necessary, chairman Tan Sri Muhammad Ali Hashim said.

Hashim said the group has been looking at geographically diversifying its supply network since Malaysia reported cases of bird flu last year.

Last week, bird flu was reported in a village near the capital Kuala Lumpur.

The proposed factory - to start operating by the middle of next year, would source chickens from around Johor. 

The new plant would boost the company's poultry processing capacity by 50 percent, complementing the Group's two other plants in Johor state, one in Port Klang and the other in Bukit Mertajam.

Should large scale outbreaks occur in Malaysia, Hashim said that KFC has plans in place, such as the farm-to-plate emergency response and communications plan covering all business units, including breeder farms, hatchery, contract farms, processing plants and restaurants.

Sales at KFC restaurants were unaffected by the latest bird flu, but had conversely grown 12 percent over the past seven days. June is the month for school holidays in Malaysia and fried chicken appeals especially to children.

KFC is planning to open a total of 22 new outlets this year, the same number of stores it opened last year. 

Last year, the group posted a net profit of RM 98.28 million (US$28.3 million) on RM1.52 billion (US$438 million) revenue.