KUALA LUMPUR (Nov 10): Fraser & Neave Holdings Bhd (KL:F&N) has clarified that it is well capitalised to address the temporary delay in milk production at its integrated dairy farm in Gemas, Negeri Sembilan.
In a reply to theedgemalaysia.com, F&N said its established operations will continue to generate cash flow and will support the launch of new business units, such as F&N Agrivalley and F&N Foods (Cambodia).
“With cash balances exceeding RM1 billion, alongside available sukuk facilities and stand-by credit lines, we are well-capitalised to address this temporary delay and remain committed to delivering long-term value to our shareholders,” it emphasised.
The statement comes following its post-earnings briefing last Wednesday (Nov 6), in which F&N chief executive officer Lim Yew Hoe told reporters that its cash flow will be affected by the delayed start in milk production at its integrated dairy farm in Gemas, Negeri Sembilan, due to the sudden suspension of imports of dairy cows from the US, as a result of concerns over an avian flu outbreak.
The group is expecting a delay of six- to 12 months in milk production at the farm from its initial start date of January 2025, due to the import issue.
Lim said that the Department of Veterinary Services had suddenly issued a letter on Oct 24 to cancel import permits for dairy cows from the US, due to concerns over a HPAI H5N1 outbreak. The letter, received just two days before the scheduled boarding date for the cows on Oct 26, left the group with limited time to address the department’s concerns.
The group is now in talks with its vendors and regulators in Malaysia, to explore alternative sourcing options.
The pregnant heifers, a total of 2,500 originally meant for the farm, will now be sold in the US domestic market.
Up until two weeks ago, the cows had undergone testing for diseases — excluding avian flu — as agreed upon by Malaysian and US authorities, with all results returning clear, he said. F&N said it had also provided regular progress updates on the cows to the Malaysian authorities, and had received no negative responses.
Nevertheless, despite all efforts — including from the US Embassy and US Department of Agriculture issuing attestations and certifications that the cows had been isolated prior to their departure — the sudden permit cancellation has delayed F&N’s plans, Lim said.
Last Friday (Nov 8), F&N closed at RM28.66, down 6.76% from Nov 6’s close of RM30.74.
At RM28.66 per share, the group’s market capitalisation stood at RM10.51 billion.