the Russian sees huge potential in Malaysia

Nutritek plans production facilities in Malaysia, China

Published: 2008/07/30
MOSCOW: Russian baby food firm Nutritek expects revenue to rise to US$550 million in the 2009 financial year, helped by expansion in Southeast Asia, general director Oleg Ochinsky said in an interview. Sales at Nutritek, part of Nutrinvestholding, were US$396.9 million in the year ended March 31, 2008, and the company expects to generate revenue of about US$412 million in the 2008 financial year, Ochinsky said.Of the total, revenue from operations in Southeast Asia will reach US$142 million this year and US$225 million next year.“Southeast Asia and China are enormous markets and have high birth rates,” Ochinsky said.
“Today it is the largest and the fastest-growing market in the world and the entry threshold is not yet that high. This is why we have entered this market.” In 2007, the company sold its Russian dairy business for US$350 million with the aim of investing in Southeast Asia and elsewhere.This year it acquired control of New Zealand Dairies Limited, becoming the first foreign investor to get control of one of the country’s milk processing businesses. Ochinsky said Nutritek planned to invest US$50 million in the construction of a second line at the plant to double capacity by the end of 2009. The investment is expected to pay back within three to five years.The plant will also produce organic milk products. “In Europe, the organic food segment is growing by 30 per cent annually. In Russia it has just started to take shape,” Ochinsky said.“This is an interesting area and we will be developing it in the near future. Retail margin can amount to up to 70 per cent in this segment. This is a real premium niche.”

MALAYSIA, CHINA

The company also plans to open its own production facilities in Malaysia and China in 2009.“In Malaysia, the site has already been chosen. Investments into the construction and equipment purchases will initially amount to US$10 million,” Ochinsky said.“In China, we intend to launch production before the end of 2009. We are interested in acquisitions or joint ventures with a local brand producer with a moderate market share.” This year, Nutritek plans to start supplies of half-finished milk products to China, Indonesia and Vietnam from New Zealand Dairies. In July, it started supplies to Malaysia.“The size of the baby food market in China, Malaysia, Vietnam and Indonesia where we want to operate is worth US$4.7 billion, according to Euromonitor, with potential to grow by up to 18 per cent within the next five years,” he said.Apart from Asia, Nutritek is looking to expand in Africa and the Middle East, Ochinsky said. “We are looking very seriously at the Middle East and Africa, especially at its northern part. These markets are attractive for us.” The company also does not rule out acquisitions in Russia and the Commonwealth of Independent States (CIS), where it may spend around US$100 million on buys and modernisation.Nutritek, founded in 1990, has a 15.4 per cent share of the Russian baby food market. It had a net profit of US$26 million and earnings before interest, taxation, depreciation and amortisation of US$75.8 million in the year ended March 31, 2008.The company is 53.3 per cent controlled by Marshall Milk Investments, beneficially owned by Konstantin Malofeev and Georgiy Sazhinov. The remaining shares are freely floated. - Reuters

i was made to understand that there is one Muslim/Malay/Bumi company involved in negotiation process to purchase/acquire one dairy farm in New Zealand too. Hope to be materialised very soon. Yes, Malaysia has a lot to offer as regional hub for food industry especially on the HALAL products. If the Russians could smell huge potential in Malaysia and they capitalise it asap, how about us? Let's explore.... (sorry, no time to explore -- let's invest..)