Dutch Lady Milk Industries Berhad registers fourth quarter revenue of RM361.7 million

Leading dairy manufacturer, Dutch Lady Milk Industries Berhad (DLMI) registered revenue of RM361.7 million and a loss before taxation of RM32.8 million in the fourth quarter ending December 31 2022. DLMI said the loss in the fourth quarter, could be attributed to one-off restructuring costs related to the earlier announced optimisation of its dairy production operations as well as to a higher than expected impact from the Bilateral Advanced Pricing Arrangement (BAPA).

“The fourth quarter results is also largely a reflection of the one-off gain of RM155 million in 2021 related to sale of DLMI’s Petaling Jaya manufacturing land and buildings as well as lease-back of existing facilities and is not at all representative of DLMI’s strong business fundamentals amidst strong current and future demand for dairy products”, said Managing Director Ramjeet Kaur Virik.

She said product volume and revenue grew by 9.4 percent and 20.4 percent respectively in the fourth quarter compared to a year ago due to strong demand for milk as an essential daily nutrient as well as minimal price increases.

“The increased one-off costs were anticipated and within our internal estimates as DLMI is in the midst of an exciting generational shift of our manufacturing hub from Petaling Jaya to Bandar Enstek,” she added.

DLMI had announced last year the discontinuance of its milk powder operations for the local market adding the company will also cease several other lines in phases over the next two years as part of the overall optimisation exercise. A one-off restructuring cost of RM17.9 million was absorbed in the fourth quarter as part of the exercise.

The BAPA, which covers certain related party transactions between 2018 and 2022, resulted in DLMI requiring to make the adjustment of RM25 million to comply with the BAPA for the qualifying period in the fourth quarter. This was exacerbated by unpredictable exchange rate fluctuations caused by global uncertainty due to the Ukraine war and supply chain issues.

Prospects for 2023 will remain challenging with the overall market still impacted by domestic and global uncertainties as well as persistent inflationary headwinds.

“Despite these challenges, DLMI remains focused on our investments in our new manufacturing hub in Bandar Enstek, with costs rising to RM540 million compared to the previously announced RM340 million,” Ramjeet said.

She added that rise in investments were mainly tied to unavoidable higher construction material cost, fuel, labour as well as other capital expenditure items as construction continued even during the pandemic years.

DLMI’s purpose of ‘Nourishing our Planet and People in Every Stage of Life’ is the bedrock of its operations in Malaysia. The company, set to mark its 60th anniversary in 2023, will continue to invest in its suite of strong brands and talented people to help increase the consumption of milk in the country and develop a passionate, future-focused workforce for the long-term benefit of the country.

Ramjeet also said that DLMI has strong confidence in the generational appeal of its brands and the strong nutritional impetus of milk to develop the next generation of Malaysians and will continue its ongoing successful long-term programme to train local dairy farmers to improve the quantity and quality of local fresh milk.