KUALA LUMPUR (Nov 6): Fraser & Neave Holdings Bhd (KL:F&N) expects its integrated dairy farm, F&N AgriValley, to take several more years to break even, with no specific timeline stated as it works to stabilise operations.
Chief executive officer Tarang Gupta said the group is prioritising improvements in productivity and cost efficiency at the dairy farm in Gemas, Negeri Sembilan, before moving ahead with a larger scale-up.
"It is going to be a few years, it's not a few quarters," Gupta said at the group's financial results briefing on Friday.
His comments come after earlier expectations from equity analysts that the dairy operations would break even by 2028, although he stopped short of confirming whether that timeline remains achievable.
Gupta explained that profitability depends on several factors in relation to scaling operations, including milk production, herd expansion, animal reproduction, feed costs and weather conditions.
The dairy farm's operating costs have weighed heavily on F&N's Malaysian business, which reported an 80.2% drop in operating profit to RM15.84 million for the fourth quarter ended Sept 30, 2026, from RM79.94 million a year earlier, despite revenue edging up 0.9% to RM737.82 million.
For the full financial year, the Malaysian segment's operating profit fell 28.3% to RM200.87 million, even as revenue grew 3.3% to RM3.06 billion.
The weaker contribution from AgriValley, alongside disruptions to its Indochina operations, contributed to a 14% decline in group net profit to RM437.09 million for FY2026, from RM508.47 million a year earlier. Revenue fell 5.3% to RM4.92 billion.
Gupta said the farm's milk yields have stabilised at more than 30 litres per cow per day, but the group is still working to improve its breeding cycles and reduce feed costs.
AgriValley currently has approximately 8,000 cattle, of which about 3,000 are producing milk.
He said F&N is not prepared to accelerate expansion before achieving greater operational stability, as scaling up too quickly could lead to higher costs.
The group said it has also begun harvesting crops for animal feed, although Gupta acknowledged that production remains inconsistent due to changing weather conditions.
Feed remains the dairy operation's largest variable cost, while increasing milk production would help spread the farm's substantial fixed costs over a larger output.
Nevertheless, Gupta said the existing infrastructure could support a larger herd, and that further investments would be made in phases rather than through another major upfront capital commitment.
He added that the group would need to go through more farming and breeding cycles before it could better assess the dairy operation's long-term profitability.
Shares of F&N rose by RM1.02 or 4.81% to RM22.24 at Friday's trading session break, giving the group a market value of RM8.16 billion. Year to date, its share price has dropped by 36.82%.