KUALA LUMPUR (Nov 22): Dutch Lady Milk Industries Bhd’s net profit for the third quarter ended Sept 30, 2023 (3QFY2023) dropped 31.18% to RM16.79 million from RM24.4 million in the previous year’s corresponding quarter as depreciation costs and one-off operating costs more than offsets a higher revenue.

In a filing with Bursa Malaysia, the dairy producer attributed the decline in quarterly profit to the ongoing accelerated depreciation of assets in its Petaling Jaya factory. Additionally, the group incurred one-off operating costs associated with the construction and transition to its new facility in Bandar Enstek, Negeri Sembilan.

“These costs for accelerated depreciation and one-offs are included in the reported operating profit amounting to RM18.3 million. These one-off results negatively impacted the operating profit which declined by 18.5% (from RM6 million in 3QFY2022),” Dutch Lady told Bursa Malaysia. 

Notably, during the quarter under review, the group also saw a tax phasing correction over 2022, related to the treatment of provision for restructuring costs taken in 2022, which negatively impacted net profit in Q3FY2023 by RM3.1 million.

Excluding depreciation and one-offs, the group’s operating profit grew 22.4% to RM44.4 million from RM36.32 million, attributed to cost optimisation  and revenue growth management measures as a hedge against the weakening ringgit as well as lower dairy raw material costs. 

Dutch Lady declared a second interim dividend of 25 sen per share — bringing the year-to-date dividend to 50 sen per share — to be paid on Dec 14. 

Its quarterly revenue increased by 10.37% to RM372.79 million against RM337.77 million in 3QFY2022 due to strong demand for dairy products coupled with selective price increases in the year to offset the impact of inflationary challenges. 

For the cumulative nine months ended Sept 30, Dutch Lady’s net profit decreased by 25.47% to RM49.57 million from RM66.5 million, although revenue rose 10.29% to RM1.08 billion from RM977.72 million. 

Dutch Lady managing director Ramjeet Kaur Virik said in a statement that the group would invest RM540 million in total between 2021 and 2025 in the state-of-the-art Bandar Enstek manufacturing hub to cater for the group’s ambitious plans for the future.

“We continue to be focused on the next phase of our growth as our new manufacturing hub is scheduled to be completed in 2024. The upgraded technology will bring new skills and opportunity for growth in terms of innovation, improved efficiencies, and overall sustainability.”

“To bring this massive project to fruition, Dutch Lady is focused on optimising working capital and enhancing the group’s cash flow to complete the construction of the complex and the transitioning process next year,” she added. 

At Wednesday’s market close, Dutch Lady inched up two sen or 0.09% at RM22.58, with a market capitalisation of RM1.45 billion. Year-to-date, the counter has fallen over 25%.