F&N’s fresh milk project to take off next year

PETALING JAYA: Fraser & Neave Holdings Bhd (F&N) anticipates that the initial milking for its fresh milk project at the integrated dairy farm in Ladang Permai Damai will begin in December 2024, with the products set to be available in the market early 2025.

In regard to this development, F&N CEO Lim Yew Hoe announced that the group has submitted the Environmental Impact Assessment as part of the process to appoint strategic partners.

“Now we are engaging stakeholders including federal and state government agencies to complete this project,” he said in a press conference when announcing its first half FY2023 financial results on Friday.

Lim added that the group is expected to become the largest fresh milk producer in Malaysia, with an annual production capacity of 100 million liters, utilising 20,000 dairy cows for both domestic and international markets.

He said that the move into the fresh milk industry will strengthen the brand’s position as a leading food and beverage (F&B) company in Malaysia.

One of the key growth segments in which the group has invested substantial resources is its halal packaged food, representing its fourth pillar of growth.

Lim said, “Cocoaland has contributed positively to the group, and we see a promising future in this acquisition. Integration of the businesses is ongoing.”

F&N completed the acquisition of confectionery and snack brand Cocoaland Holdings Bhd for RM489.2 million on Nov 4, 2022, making it a wholly owned subsidiary of the group.

Lim also expressed confidence in the group’s financial strength and strong cash flow. He noted that the group was able to deliver a higher bottom line despite the RM15.5 million increase in interest costs due to the recent strategic acquisitions, demonstrating F&N’s capacity to shoulder the additional financial commitments.

He further added that once some of the capex projects become operational, the resulting savings and earnings would help offset the increased interest commitments.

“We are cautiously optimistic going into the second half of the fiscal year as markets continue to recover. Our strategic decisions have placed us on a firm footing to defend our margins, strengthen our brands and enable future growth,” said Lim.

While some commodity prices have begun to stabilise, prices of tin plates/cans, milk, palm oil and sugar are expected to remain high in 2023. To address the economic uncertainties, the group will enhance its forecasting capabilities and implement effective hedging strategies.

F&N’s net profit increased over 8% to RM101.18 million in the second quarter ended March 31, 2023, up from RM93.87 million a year ago, largely due to its strategic acquisitions, mainly Cocoaland Holdings Bhd.

Revenue for the quarter under review rose 9% to RM1.21 billion compared with RM1.11 billion a year before, driven by festive sales for its Malaysian food & beverage division and contribution from Cocoaland.

The group has declared an interim single-tier dividend of 27 sen per share in Q2’23, the same amount as in Q2’22, totalling RM99 million. The dividend is scheduled to be paid on June 1, 2023.