KUALA LUMPUR (Feb 24): Dutch Lady Milk Industries Bhd (DLMI) slipped into the red, as it booked a net loss of RM20.23 million for the fourth quarter ended Dec 31, 2022 (4QFY2022), from a net profit of RM183.46 million a year ago.

The dairy product maker blamed the quarterly net loss on a RM17.9 million one-off restructuring cost related to the optimisation of its dairy production operations in Petaling Jaya, as well as RM25 million related to the 2018-2021 bilateral advanced pricing arrangement between the authorities of Malaysia and the Netherlands with regard to certain related party transactions, which was finalised in 2022.

In addition, the group noted that it booked a gain of RM155 million in FY2021 related to the disposal of manufacturing land and buildings, and the lease-back of its current production facility in Petaling Jaya.

“On a like-for-like basis, operating profit excluding accelerated depreciation and one-off items was RM12.7 million, a decline of 73% versus the same quarter in FY2021 (RM47.75 million), mainly driven by an unprecedented increase in the cost of raw materials and the impact of exchange rates,” it said.

Quarterly revenue, however, increased by 20.4% to RM361.69 million, from RM300.4 million a year ago, mainly driven by continued demand for milk and product price increases.

The dismal quarterly earnings dragged DLMI’s annual net profit to RM46.27 million, the lowest in 14 years since FY2008 when it posted annual net profit of RM42.6 million. The figure was also 81.34% lower than RM248 million in net profit posted for FY2021. Annual revenue, meanwhile, rose 18.14% to RM1.34 billion, from RM1.13 billion previously.

Moving forward, DLMI said it will continue to focus on optimising the company’s cash flow to battle the inflationary headwinds, and secure internal financing for new manufacturing facilities.

It warned that the market remains volatile and is subject to various domestic and global uncertainties and challenges, foreign exchange rate fluctuations and potential regulatory changes.

“Global dairy prices are still at high levels, although there may be some easing in pricing in the months ahead. At the same time, global inflationary headwinds persist,” it added.

Nonetheless, over the long term, DLMI said the group’s outlook remains positive due to the strength of its brands, and the increasing need and recognition of the "goodness and nutritional value of milk among Malaysians".

DLMI’s share price closed up two sen or 0.67% at RM30.10 on Friday (Feb 24), giving the group a market capitalisation of RM1.93 billion.