Main market bound Farm Fresh announced its third-quarter results for the financial year ending 31 March 2022, with revenue of RM116.7 million and profit after tax of RM11.8 million, this is a decrease from revenue of RM128.6 million and PAT of RM14.1 million it recorded in the same period in 2020.
The group attributed the reduced revenue to the overall impact of the prolonged Covid-19 pandemic which resulted in dampened economic activity, consumer confidence, and levels of household income in Malaysia and the ceasing of raw milk sales by its Australian farm to third parties since the end of September 2021.
However, the group’s gross profit margin for the three months ended 31 December 2021 improved to 29% from the 25% recorded in the preceding quarter on the back of the price increases by an average of 5% for its chilled ready-to-drink (“RTD”) milk products in September 2021 and ambient RTD products in December 2021. For the nine-month period ended 31 December 2021, Farm Fresh registered a cumulative revenue and PAT of RM373.9 million and RM61.3 million respectively, an improvement of 3% and 169.7% year on year.
The revenue growth was mainly led by an increase in the RTD milk category market share from 15% in December 2020 to 18% in September 2021 due to higher recruitment of new customers, higher sales of its RTD milk products and launching of new products during the financial period.
According to Frost & Sullivan, the powdered milk category in Malaysia has a market size of RM2.3 billion in 2020. Farm Fresh is currently formulating a product without any sugar, maltodextrin, preservatives, artificial flavouring, and colouring that will be much more beneficial to kids aged from 3 to 12 years old. This led to the group being awarded three contracts under the School Milk Program (Program Susu Sekolah) to provide at minimum 42 million packs of milk to 3,546 schools in the Northern, Eastern, and Southern regions of Peninsular Malaysia, during the period from March 2022 to February
- In the near term, the Group is focusing on completing and operationalising its Taiping farm and processing plant, an additional filling and packaging line at Muadzam Shah facility and the processing facility at the UPM Farm which will increase the annual production capacity by 29.8 million litres by 2022. With the completion of the Taiping processing plant, the capacity at the Larkin processing plant can be freed up for exports in Singapore. In addition, the Group intends to launch its regional expansion with its planned entry into Indonesia, Philippines and Hong Kong.
On 18 March 2022, Malaysian Rating Corp Bhd (MARC) has affirmed its rating of AA-IS on Farm Fresh’s Islamic medium-term notes (IMTN) programme of RM1 billion under the Shariah principle of Wakalah Bi Al-Istithmar with a stable outlook.
According to MARC, the IPO will expand Farm Fresh’s share capital and reduce the group’s leverage to a moderate 0.48 times from 0.98 times. The Group is scheduled to be listed on the Main Market of Bursa Malaysia Securities Berhad
on 22 March 2022. Farm Fresh’s market capitalisation works out to approximately RM2.5 billion based on the final retail price of RM1.35 and its enlarged share capital of 1,857.9 million shares upon listing.
