Dutch Lady to benefit from stronger ringgit

by KEVIN WONG / TMR file pix

Dutch Lady Milk Industries Bhd will leverage on the stronger ringgit and relatively stable raw material prices to drive its growth this year.

MD Tarang Gupta said the prices of raw materials have been relatively stable compared to 2017, hence, the outlook for 2018 is quite positive.

“From a market point of view, in respect of the input costs being either high or low, we will have to continue to support our consumers and use innovation to fuel the growth of the company.

“It is important to invest in future growth, as it will be an advantage for the company,” he said.

Commenting on the company’s advertising and promotion (A&P) expenditure, he said it is more important to optimise the value instead of investing more.

“We want to optimise our A&P value and to use the right channels — the new age media is digital advertising where it will reach our target audience,” he said.

According to Gupta, with the global price for milk fat at US$6,000 (RM23,520) per tonne now, it will be difficult to predict the price of dairy materials.

“We observed that demand for milk has been increasing over the last few weeks and it has become more favourable. For milk powder, it is relatively okay for now.

“The price is dependent on the global supply and demand. In addition, dairy is also seasonal as where production comes from both southern and northern hemispheres,” he said.

He added that there is no forward market for the company’s raw materials.

“We hedge our currency exposure where our hedging policy is about 70% for six months forward. In addition, we do minor anticipation of decrease and increase of the level of purchase that we are in,” Gupta said.

Dutch Lady Malaysia’s first quarter revenue which ended on March 31, 2018, has increased by 6.4% year-on-year (YoY) to RM266.1 million, while pretax profit improved by 10.3% YoY.

Gupta said the strong results were driven by strong fundamentals and clear focus with lower input cost.

“We will remain focused and committed to leveraging on the strength of our brand and range of our quality product offerings. We will continue to invest in our brands, people and capabilities in order to go through the challenges which lie ahead,” he said.