Farm Fresh Bhd reported a revenue of RM249.2 million for the second quarter ended 30 September 2024 which reflected a growth of 25.65% year-on-year (YoY) from RM198.3 million recorded in 2023, while positive outlook is expected for the dairy operator on product range expansion and regional venture into the Filipino market, according to a Bursa disclosure filed by the company dated Nov 28.

Profit after tax (PAT) for the quarter under review also grew by 105.97% YoY to RM27.0 million, from RM13.1 million1.

The quarterly revenue which increased by 25.65% or RM50.9 million could be attributed to revenue contribution from Sin Wah, higher HORECA (hotels, restaurants and cafes) and commercial UHT sales, coupled with positive impact from launching of new products including Farm Fresh Grow series mainly for children, Farm Fresh Choco Malt and consumer-packaged goods (CPG) ice cream.

The surge in profit was in line with the the higher topline revenue, mainly driven by significantly lower cost of dairy raw materials, coupled with contribution from Inside Scoop and Sin Wah and further boosted by improving margins from Australian operations following the reduction in season farmgate prices by about 11% beginning July 2024.

Nevertheless, the surge in profit was partially offset by higher fair value losses on biological assets of RM2.7 million (as compared to the fair value loss on biological assets of RM1.2 million in the corresponding quarter) and unrealized foreign exchange loss of RM1.7 million (as
compared to unrealized loss of RM0.1 million in the corresponding quarter) due to unfavourable forex translation on bank balances denominated in foreign currency, particularly US dollar.

The six-month2 revenue expanded by 27.91% YoY to nearly RM490.9 million3, from over RM383.8 million4 from the corresponding period last year. Meanwhile, the half-year PAT amounted to over RM53.5 million5, reflecting an increase of 185.94% YoY, from RM18.7 million6 last year.

For the quarter under review, earnings per share amounted to 1.40 sen, compared to 0.68 sen for the corresponding quarter in the previous financial year.

Total assets position as at 30 September 2024 stood at nearly RM1.36 billion7, marking an expansion of 6.10% from nearly RM1.28 billion8 as at 31 March 2024. Cash and cash equivalents held by Farm Fresh totalled at over RM96.8 million9 as at 30 September 2024.

Prior to this, the group posted strong results in the previous quarters and expects to continue its growth trajectory with several positive development in product category expansion and also regional expansion.

In July 2024, Farm Fresh launched the choco malt beverage powder mix, aiming to get a significant market share in the chocolate malt beverage market in Malaysia with a total market size of more than RM1 billion. In addition, the group launched its CPG ice cream in August 2024 to great reception from consumers resulting in demand far outstripping supply, leading to capacity expansion for ice cream production at the Taiping plant, and the additional capacity from the Enstek plant due to be completed in the second half of 2025.

Other new categories include full cream milk power to be produced at the Muadzam Shah plant, butter at the Taiping plant, and HORECA, modern trade and cultured milk at the Larkin plant.

Farm Fresh is in the process of expanding its Muadzam Shah farm with the additional 500 acres of land leased from the Pahang state government with expected commencement of operations in mid-2025. This expansion will double its total capacity in Muadzam Shah to 6,000 dairy cows.

Meanwhile, regional expansion is taking shape in the Philippines, where the group started its factory operations in end-September 2024 and is planning to have its chilled products, UHT products and milk powder products sold in the Philippines, focusing firstly on the Greater Manila market.

As for Australia, with the reduction of farmgate milk prices by about 11% and incremental volume of exports to the Middle East market, the group expects its Australian results to continue to improve over the next few quarters. Farm Fresh subsidiary, St David Dairy has also recently won the Australia National Gold medal award for butter, the same butter we have started to produce since October 2024 in a larger scale for exports with our investment in premium cultured butter capacity at our Fitzroy, Melbourne site.

On the ESG front, the group's biogas plant was completed and commissioned in April 2024, and once fully operational, is set to reduce 9,800 tonnes carbon dioxide equivalent (CO2e) per annum, coupled by a reduction of diesel usage of 670,000 litres per annum.

Farm Fresh's Milk on Tap initiative, that is selling fresh milk in reusable glass bottles, has been successfully expanded to eleven locations in Jaya Grocer and Jom Cha outlets across Peninsular Malaysia.

1. Q2FY2024/25 Revenue: RM249,163,000; Q2FY2023/24 Revenue: RM198,300,000; Q2FY2024/25 PAT: RM26,972,000; Q2FY2023/24 PAT: RM13,095,000. [FY2024/25: Financial period from 1 April 2024 to 31 March 2025; FY2023/24: Financial period from 1 April 2023 to 31 March 2024] ︎

2. Six-month period: Q1 and Q2, from 1 April 2024 to 30 September 2024 ︎

3. RM490,862,000 ︎

4. RM383,756,000 ︎

5. RM53,483,000 ︎

6. RM18,704,000 ︎

7. RM1,357,649,000 ︎

8. RM1,279,601,000 ︎

9. RM96,845,000 ︎