December 4, 2008

KFC Malaysia expects to sustain its sales growth as demand for deep-fried chicken defies the economic slowdown.

Chairman Muhammad Ali Hasham said local consumers' fondness for fried chicken and help tide KFC over the economic downturn that lowers consumer spending.

Sales at restaurants opened more than a year rose 16 percent in 2008, double the rate of 2007 and three times faster than the global average for KFC outlets, Hashim said.

The company's stock has also increased 13 percent this year.

It's the best growth in at least 10 years, and KFC's store expansion and conversion of some branches into 24-hour restaurants have helped to achieve the growth, said Vincent Khoo, an analyst at Aseambankers Malaysia Bhd.

While the food and beverage sector is usually recession-resistant, KFC will not be immune to the global recession and earnings could decline, said Khoo. 

KFC Malaysia's third quarter profits jumped 20 percent on-year to MYR31.5 million, with sales increasing 29 percent on-year to MYR552.4 million. Net income for the first three quarters of 2008 surged 24 percent to MYR90.2 million.

KFC is tapping the popularity of fried chicken in Malaysia, where two-thirds of the population is Muslim and the religion forbids pork consumption.

KFC raises and processes its own chickens but is planning to continue expansion, as seen by the company's decision to invest MYR10.4 million to buy 400 acres of land in the southern state of Johor for a new chicken farm.

KFC has 431 outlets in Malaysia, and will spend MYR27 million next year to open 38 stores, Muhammad said.

KFC Malaysia produces about 34 million broilers per year and expects its poultry requirements to grow 8 percent per year for the next five years to meet rising demand.