In addressing inflation hit, Dutch Lady ups new facilities’ capex to RM540 mil

KUALA LUMPUR (Nov 15): Dutch Lady Milk Industries Bhd (DLMI) announced that the total new capital investment for the planned new facilities in Bandar Baru Enstek, Negeri Sembilan will be increased to RM540 million, from the previous estimate of RM340 million.

This represents an increase of RM200 million or 58.8%.

“The increase is mainly due to the inclusion of additional capex items, as well as unprecedented inflation which has significantly increased the cost of materials, fuel and labour,” the group’s bourse filing showed.

The construction of the new facilities will be funded through internal funds, it added.

To recap, DLMI sold its factory land in Petaling Jaya to UEM Sunrise Bhd last year for RM200 million, as part of its move to relocate to a new manufacturing facility site in Negeri Sembilan, which is to be constructed between 2021 and 2025.

20% rise in 3Q net profit on strong demand, higher prices

DLMI’s net profit for the third quarter ended Sept 30, 2022 (3QFY22) rose 19.74% to RM24.4 million, from RM20.38 million a year earlier, on robust demand for the group’s products, higher sale prices and strong cost management actions.

However, this was partially offset by escalating prices for global dairy raw materials and negative foreign exchange results due to the weakening ringgit against the US dollar, the group said in a Bursa Malaysia filing.

Quarterly revenue rose 16.2% to RM337.77 million from RM290.66 million in 3QFY21, “mainly driven by continued strong demand for milk as an essential product and necessary price increases to offset strong inflationary headwinds”, DLMI said.

DLMI declared a second interim dividend of 25 sen per share, to be paid on Dec 13.

For the cumulative nine months ended Sept 30, 2022, the group’s net profit increased 4.04% to RM66.5 million from RM64.54 million in the same period of FY21, as revenue grew to RM977.72 million from RM833.16 million.

DLMI managing director Ramjeet Kaur Virik said the outlook for the rest of the year as well as next year remains uncertain due to inflationary concerns and the persistent global supply chain challenges not just for the organisation but also for the manufacturing sector in general.

The company will continue to be prudent and agile in its operations in order to preserve cash and control cost where possible in a complex manufacturing environment, she added in a statement.

DLMI’s share price closed at RM31, giving the group a market capitalisation of RM1.98 billion.