KUALA LUMPUR (March 18): Main-market bound Farm Fresh Bhd saw its net profit for the third quarter ended Dec 31, 2021 (3QFY22) fall 24.13% to RM11.46 million from RM15.1 million in 3QFY21 due to lower revenue, as well as higher animal feed cost and freight cost.
The decrease was also attributed to listing expenses relating to the group’s initial public offering (IPO) exercise and operating losses from its Australian subsidiary, Henry Jones Foods Pty Ltd’s IXL fruit jam business, which has been downsized during the current financial year, it noted in a bourse filing on Friday (March 18).
Earnings per share slipped to 0.7 sen, from 0.82 sen a year earlier.
The dairy product specialist reported a revenue of RM116.67 million, declined by 9.26% year-on-year from RM128.57 million. Farm Fresh said the lower revenue was due to the overall impact of the prolonged Covid-19 pandemic, resulting in dampened economic activity, consumer confidence and levels of household income in Malaysia, as well as the ceasing of raw milk sales by the group’s Australia farm to third parties since end September 2021.
“Since then, upon completion of our Kyabram facility in October 2020, the milk produced by our Australian farm has been supplied internally for our production of dairy products and onward sales, consequently reducing the raw milk required to be purchased externally,” it added.
For the nine months ended Dec 31, Farm Fresh’ net profit jumped 154% to RM62.2 million from RM24.49 million, as nine-month revenue increased 2.99% to RM373.85 million from RM362.99 million. EPS jumped to 3.8 sen, from 1.5 sen a year ago.
“The revenue growth was mainly led by an increase in the ready-to-drink (RTD) milk category market share from 15% in December 2020 to 18% in September 2021, attributable to higher recruitment of new customers, higher sales of its RTD milk products and launching of new products during the financial period,” said Farm Fresh.
Despite the challenging environment posed by the Covid-19 pandemic, inflationary pressures from higher input prices and most recently, the uncertainties caused by the Russian military invasion of Ukraine, Farm Fresh said it remains confident in registering long term growth in its sales, market share and profitability within the fast-growing dairy segments it competes in.
“Specifically, our planned launch of the growing up milk based on a fortified fresh milk formula, which will compete with both powder-based kids’ milk and RTD reconstituted milk-based products, will enable us to further drive growth with our culture of innovation and commitment for producing healthier products for our growing children”, said the group’s managing director and chief executive officer Loi Tuan Ee in a separate statement.
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, said Farm Fresh.
In addition, the group intends to launch its regional expansion with its planned entry into Indonesia, Philippines and Hong Kong.
Farm Fresh is scheduled to be listed on the Bursa Main Market next Tuesday (March 22). The group’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 1.86 billion shares upon listing.