Dutch Lady sees three-fold profit surge in 1Q24

KUALA LUMPUR: Dutch Lady Milk Industries Bhd (DLMI) remains cautiously optimistic due to the strength of its brands, and the increasing need for and recognition of milk's goodness and nutritional value amongst Malaysians.

“The company will continue to support local dairy farmers, aiming to enhance both the quantity and quality of locally produced fresh milk,” DLMI said in a filing with Bursa Malaysia.

In the first quarter ended March 31 (1Q24), DLMI’s net profit surged to RM26.6mil compared with RM8.5mil in the same quarter last year, translating to an earnings per share of 41.70 sen against 13.30 sen.

Revenue rose 2.4% to RM362.8mil compared to RM354.3mil last year, primarily driven by the carry-over effect of price increases implemented in 2023, as well as a specific price increase on one of the product ranges in 1Q24.

Additionally, DLMI implemented various revenue growth management initiatives focused on enhancing the product and channel mix.

The dairy group said it will continue to focus on optimising costs and cashflow by restructuring to be more efficient, reducing fixed costs to combat inflation and currency challenges, and securing funds for new manufacturing facilities.

“DLMI is employing cash generated from its operations and working capital to fund the property, plant & equipment (PPE) investments into the new production facility at Bandar Enstek.

“In the event of a shortfall in working capital, the company has sufficient committed undrawn overdraft facilities and an inter-company credit facility that can be utilised,” it said.

DLMI noted that the market continues to experience significant volatility due to a range of domestic and international uncertainties. These include fluctuating foreign exchange rates, variable commodity prices, and potential shifts in regulatory frameworks.

“Although prices of global dairy raw materials have reached a point of stability, they remain historically high and are expected to trend upwards towards the second half of the year. Ongoing geopolitical tensions are causing further fluctuations in raw material prices, which could lead to increasing costs for other commodities.

“The volatility of the ringgit, alongside these global and local uncertainties, as well as forthcoming regulatory updates and changes to the tax system, such as the increase in SST rates, present further challenges that may lead to escalated input costs in the near future,” it added.

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