KUALA LUMPUR (May 24): Farm Fresh Bhd's net profit for the fourth quarter ended March 31, 2022 (4QFY22) surged 50.63% to RM17.68 million from RM11.74 million a year earlier, on a higher gross profit margin.

In a bourse filing on Tuesday (May 24), the group said the higher gross margin reflected both an increase in sales as well as a price increase of its chilled ready-to-drink (RTD) milk products and ambient RTD products by an average of 5% which it implemented in September and December 2021 respectively.

It noted that gross profit margin improved from 27.6% to 28.6% a year ago.

Meanwhile, quarterly revenue was marginally up by 0.44% to RM128.07 million from RM127.51 million.

It noted that its Malaysian operation's revenue grew by 6.16% to RM120.68 million from RM113.68 million a year ago, driven by the recovery in economic activities and consumer confidence on the heels of further easing of restrictions and reopening of borders.

However, revenue fell 46.62% at its Australian operation to RM7.38 million from RM13.82 million in 4QFY21, as a result of ceasing of raw milk sales by its Australian farm to third parties as well as its unit Henry Jones Foods Pty Ltd downsizing its IXL fruit jam business.

For the full FY22 ended March 31, 2022, Farm Fresh logged a 120.51% year-on-year increase in net profit to RM79.89 million from RM36.23 million in FY21.

Full-year revenue was up 2.33% to RM501.92 million from RM490.5 million on the back of higher recruitment of new customers in the Malaysian market, higher sales of RTD milk products and launch of new products.

^No dividends declared for the financial year under review

On its prospects, the group said given the long-term headwinds — Russia and Ukraine conflict causing economic uncertainties, and higher input prices — the group is to increase prices for its chilled RTD products in Malaysia effective mid-July by an average of 5% and in Singapore an average of 8% effective Aug 1.

"Notwithstanding the cost pressures, the group remains confident it is poised to register long term growth in its sales, market share and profitability within the fast-growing fairy segments it competes in," it added.

In a separate statement, Farm Fresh group managing director and group chief executive officer Loi Tuan Ee said that in terms of the group's expansion plan, it expects its Taiping farm and processing plant to be fully completed by this year.

"This will then allow our Larkin plant to focus on fulfilling the demand from Singapore which has been a growing market over the past three years.

"On the regional front, we have identified strategic growth markets to penetrate into, which includes Indonesia, the Philippines and Hong Kong. As such, I am confident we will be able to deliver long term value to our shareholders in terms of our sales and market share," he added.

Listed on March 21, Farm Fresh's counter has risen 24.44% to its Tuesday closing price of RM1.68, giving the group a market capitalisation of RM3.12 billion.