KUALA LUMPUR (Nov 28): Farm Fresh Bhd's (KL:FFB) net profit more than doubled in the second quarter ended Sept 30, 2024 (2QFY2025), as contributions from Inside Scoop, Sin Wah and profitable Australian operations were boosted by decreased dairy raw material costs.

Net profit rose 105% to RM26.18 million or 1.40 sen per share, from RM12.79 million or 0.68 sen per share a year ago, a bourse filing showed on Thursday.

Farm Fresh declared an interim dividend of one sen per share, with an ex-date of Dec 12, payable on Dec 27.

Quarterly earnings, however, were partially offset by higher fair value losses on biological assets and an unrealised foreign exchange (forex) loss due to unfavourable forex translation on bank balances denominated in foreign currencies, particularly US dollars.  

Revenue climbed 26% to RM249.16 million from RM198.3 million, attributable to quarterly contributions from Sin Wah, higher Horeca (hotels, restaurants and cafes) and commercial UHT sales, coupled with the positive impact of new product launches.

In a separate statement, Farm Fresh said its gross margin during the quarter under review improved to 33.6% from the 26.3% a year ago, mainly driven by a reduction in input costs of dairy raw materials as well as contributions from Inside Scoop and Sin Wah. 

This was in addition to the turnaround of the group's Australian operations, which recorded a net profit in the quarter.

For the first half ended Sept 30, 2024 (1HFY2025), the group's earnings soared 172% to RM52.18 million from RM19.16 million, while revenue increased 28% to RM490.86 million.

Group managing director and chief executive officer Loi Tuan Ee said Farm Fresh is in the midst of a few expansions, including increasing the capacity of its Taiping plant, while waiting for its upcoming Enstek facility to be completed and operational in the second half of 2025.

"We plan to introduce our full cream milk powder, which will be produced at the Muadzam Shah plant, butter which will be produced at the Taiping plant focusing on both Horeca and modern trade, in addition to cultured milk set to be produced at the Larkin plant. We believe all these products will contribute to our continuing growth momentum."

The group is expanding its Muadzam Shah farm with an additional 500 acres (202.34 hectares) of land leased from the Pahang government, with expected commencement of operations in mid-2025. This expansion will double the group's total capacity in Muadzam Shah to 6,000 dairy cows.

Meanwhile, regionally, Loi said operations in the Philippines had progressed well, following the commencement of factory operations in September.

In Australia, where operations just turned profitable, Loi expects an 11% reduction in farmgate milk prices and favourable market to continue to boost performance over the next few quarters.

Farm Fresh shares were unchanged at RM1.79 at Thursday's noon break, valuing the group at RM3.36 billion.