Farm Fresh Records 32.5% Revenue Growth To Earn RM162.1 Million From New Products, School Milk Programme

One of Malaysia’s leading dairy producers, Farm Fresh Berhad (Farm Fresh) recorded a revenue of RM162.1 million for the second quarter ended 30 September 2022 (“Q2FY2023”), representing a 32.5% increase from the RM122.4 million reported for the corresponding quarter of the previous financial year, and a 12.6% increase as compared to the preceding quarter ended 30 June 2022.

The growth was mainly driven by positive sales momentum, the launch of new products and further boosted by the School Milk Programme. Despite the cost pressures arising during the quarter, the Group has managed to maintain its gross profit margin, which reduced slightly from 24.6% in the corresponding quarter to 24.5% in the current quarter.

The Group achieved a normalised profit after tax and minority interest (PATAMI) of RM13.3 million, lower by 15.3% compared to the corresponding quarter of the previous financial year. As compared to the corresponding quarter, the current quarter has recorded significantly lower fair value gain on valuation of biological assets, higher selling and distribution cost specifically distribution costs incurred for the School Milk Programme and Employees’ Share Option Scheme expenses.

Farm Fresh group managing director and group chief executive officer Loi Tuan Ee said, “Looking ahead, the Group is expected to enjoy further growth in revenues with the launch of Farm Fresh Grow (October 2022) and Yarra by Farm Fresh (November 2022), enabling the Group to compete and garner higher market share in the ambient market.

The Taiping processing plant slated for completion in December 2022 should enable the Group to see improvement to the chilled milk production capacity, reduce logistical costs and free up capacity at our Larkin processing plant. This key development should bode well overall, where the Group will then be able to further focus on its export business to Singapore.

Meantime, the new portion pack filling and packaging line that are now in operations, coupled with an additional UHT processing line expected to be fully operational by January 2023 are seen to improve throughput and enable the Group to run all its filling and packaging lines concurrently. This will alleviate the capacity constraints that we have currently for portion packs within the ambient category.

Despite expected positives from various fronts, the Group acknowledges that it is still operating in a challenging environment posed by inflationary pressures from higher input prices. However, proactive measures to counter the higher input prices have been put in place and are likely to result in an improvement in gross profit margins in the second half of the financial year.”

“Moving forward, Farm Fresh also continues to place utmost importance in the betterment of the environment and hence will continue to drive the Group’s ESG agenda. We have recently signed a contract to develop a biogas plant in the Muadzam Shah farm, expected to be operational by end of 2023 and is expected to contribute to an estimated reduction of 9,800 total carbon dioxide (tCO2) per annum and an estimated displacement or reduction of diesel usage of 670,000 litres per annum. The Group has also pioneered fresh milk sold in reusable glass bottles beginning in September 2022 with the Milk on Tap initiative in collaboration with Jaya Grocer to provide impetus to the dairy industry to reduce plastics usage, with further roll-out in another 6 more Jaya Grocer outlets planned by January 2023,” he added.

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