Farm Fresh Bhd net profit for the fourth quarter ended March 31, 2023 (4Q23) fell by 72.38% to RM4.89 million compared to RM17.68 million in the same period the previous year.
The company’s earnings were adversely impacted by a decrease in gross profit, which was adversely affected by escalating prices of major dairy raw materials.
The dairy manufacturer’s revenue increased by 26% to RM161.36 million, attributed to a 15.2% rise in Malaysian revenue driven by positive Ramadhan sales and the School Milk Program. However, the earnings per share for 4Q23 decreased to 0.26 sen from 1.08 sen in the previous year.
For the cumulative period, Farm Fresh recorded a net profit of RM50.08 million, down from RM79.89 million. The company’s full-year revenue reached RM629.69 million, marking a 25.5% increase. The growth was mainly driven by higher school milk sales, increased sales of ready-to-drink (RTD) milk products, and the positive impact of launching new products. Additionally, Farm Fresh experienced increased Australian revenue of RM45.5 million due to higher external sales from Goulburn Valley Creamery Pty Ltd.
Farm Fresh expects farmgate milk prices in Australia to decline for the season starting in July 2023. The company’s group managing director, Loi Tuan Ee, mentioned that they have observed indications of cost pressures easing, particularly in milk ingredient costs and feed costs.
To expand production capacity, Farm Fresh will commence production at its Taiping processing plant in June. This will enhance chilled milk production capacity and reduce logistics costs for supplying to the northern states of Malaysia. The Taiping plant will allow the Johor processing plant to focus on the Singapore market. Furthermore, the company has a new processing line operational at the Muadzam Shah Facility, which has helped alleviate capacity constraints, enabling them to focus on geographic expansion into the Philippines. They have recently secured a location for a new processing plant, slated to be operational by the second half of 2023. –TMR