ESOS Program Spending Drives 21% Lower Farm Fresh Earnings in Q1 FY23

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KUALA LUMPUR (Aug 24): Farm Fresh Bhd, which listed in March, reported lower net profit for the first quarter ended June 30, 2022 (1QFY23), driven by expenses related to the stock option program of employees (ESOS) of the group. and reduction of the tax credit

Quarterly net profit fell 21% to RM15.24 million or 0.82 sen per share in 1QFY23 from RM19.21 million or 1.17 sen per share a year ago, its filing showed in stock Exchange.

The dairy producer said it incurred expenses of RM2.1 million related to its ESOS. Its tax credit was lower as deferred tax income primarily from Australian subsidiary losses declined in 1QFY23.

Revenue, however, increased nearly 7% to RM144.02 million in 1Q23 from RM134.78 million a year ago, driven by improved results from its Malaysian operations, thanks to the increase in sales of ready-to-drink dairy products (RTD) and the launch of New products.

Going forward, Farm Fresh said the operating environment is expected to remain challenging due to rising input costs, which the group is mitigating with price increases for its refrigerated RTD products in Malaysia and Singapore.

“The impact of the price increases should lead to a recovery in our gross profit margin which was down from the prior quarter,” he said.

Nevertheless, the group remains convinced that it will achieve long-term growth in sales, market share and profitability in the fast-growing dairy segments in which it competes.

“The various strategic plans that the group is putting in place, including the upcoming launch of growing-up milk based on a fortified fresh milk formula, which will compete with both powdered infant milk and products made from reconstituted milk ready-to-eat, and which will enable us to drive further growth with our culture of innovation and our commitment to producing healthy products for our growing children,” he said.

Shares of Farm Fresh closed sen or 0.6% lower at RM1.67, giving it a market capitalization of RM3.1 billion. The stock is up around 24% from its initial public offering price of RM1.35.

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