Dutch Lady 1Q net profit rises 22% to RM20.6m

KUALA LUMPUR (May 25): Dutch Lady Milk Industries Bhd's net profit for the first quarter ended March 31, 2022 (1QFY22) grew 21.9% to RM20.57 million from RM16.88 million a year prior following the full resumption of economic activities as well as high demand and a price increment.

According to a bourse filing on Tuesday (May 24), revenue climbed 15.94% to RM299.87 million from RM258.64 million in the corresponding quarter last year. Earnings per share came in at 32.1 sen, compared with 26.4 sen previously.

The group attributed the increases in revenue and profitability to enhanced economic activities due to the relaxation of Movement Control Order, regional expansion and price increases to offset strong inflationary headwinds.

"Despite the continued Covid-19 challenges, the company has been able to operate at full capacity and drive the penetration of milk consumption with occasions and affordability, continuing its purpose of nourishing the nation with trusted dairy nutrition," Dutch Lady said.

The dairy company said operating profit increased 18.9% in 1QFY22 due to higher demand for Dutch Lady products that compensated for the escalating prices of global dairy raw materials.

Part of the profit was used for accelerated depreciation of its assets in a Petaling Jaya factory that it had sold and that could not be transitioned to the new site.

In a separate statement on Wednesday, Dutch Lady managing director Ramjeet Kaur Virik added that proceeds from the land sale will be used to fund the construction of a RM400 million new manufacturing facility at Techpark in Bandar Enstek, Negeri Sembilan.

"The new smart factory will be Industry 4.0-compliant and will help spur a strong lighthouse impact for other related industries to benefit from and help expand the local business ecosystem," Ramjeet said.

Moving forward, Dutch Lady believes the market remains volatile and is subject to various domestic and global uncertainties, foreign exchange rate fluctuations and potential regulatory changes.

Ramjeet said global dairy prices are at historically high levels and are expected to remain this way for the rest of 2022, but Dutch Lady is determined to invest in Malaysia.

"DLMI (Dutch Lady Milk Industries) will continue to focus on optimising the company's cash flow to battle the inflationary headwinds and secure internal financing of the new manufacturing facilities.

"Over the long term, the outlook for DLMI remains positive due to the strength of its brands, and the increasing need and recognition of the goodness and nutritional value of milk amongst Malaysians.

"The company will continue to support the local dairy farmers and increase the quantity and quality of local fresh milk," she said.

At noon break, Dutch Lady shares were up 30 sen or 0.89% higher to RM33.90, giving it a market capitalisation of about RM2.17 billion.