JOHOR BAHRU: Farm Fresh Bhd, one of Malaysia’s leading dairy producers, recorded topline growth and higher net profits for Q1 ended June 30, 2026 (FY27) despite the ongoing cost pressures arising from higher fuel and raw material prices amid the ongoing supply chain disruptions linked to the Middle East conflict.
For the quarter, Farm Fresh recorded a revenue growth of 17.6% to RM306.4 million as compared to the RM260.6 million recorded in Q1 FY26.
This was underpinned by stronger Malaysian revenue, driven by higher mini market and e-commerce sales, paired with higher exports to Cambodia and improved sales in the Philippines.
This, in turn, led to an increase in gross profit by 8.2% from RM86.5 million to RM93.6 million.
Meanwhile, profit before tax (PBT) and profit after tax (PAT) contracted by 14.8% and 19.3% to RM30.7 million and RM26.8 million, respectively, as a result of higher distribution costs in line with the increase in exports to Cambodia and the Philippines, higher salary costs associated with the increased headcount, along with higher finance expenses incurred due to the drawdown of its Sukuk programme.
Compared with Q4’26, the group posted 11.5% revenue growth, followed by a 7.2% rise in gross profit.
This improvement resulted from a recovery in the HORECA and Consumer-Packaged Goods (CPG) ice cream segments following the seasonal impact of the fasting month in Q4’26.
Both PBT and PAT grew by 8.4% and 6.4%, respectively, from RM28.3 million and RM25.2 million.
Farm Fresh group managing director and CEO Loi Tuan Ee said the group continued to make significant progress across both category and regional expansion initiatives, while taking decisive measures to address elevated input and operating costs arising from the ongoing conflict in the Middle East.
“We have responded proactively through selective pricing adjustments, alternative sourcing strategies and operational efficiency initiatives to mitigate these cost pressures.
“Particularly relating to the usage of diesel, which a lot of our sites are heavily dependent on, we have started with our Muadzam Shah farm to use LNG, which will halve our fuel cost as compared to using diesel, not to mention the positive impact on reducing pollution and greenhouse gas emissions.
“The savings are estimated to be between RM4 million and RM5 million per annum, depending on the market price of diesel. We are also doing the same exercise for our Taiping and Larkin sites.
“The longer-term plan is to invest in a biomass plant first in Muadzam Shah, which will further reduce fuel costs to half of that of LNG while playing our part in increasing renewables usage within the group,“ he said.
Loi said despite the elevated cost environment, Farm Fresh’s Malaysia operations remained resilient, supported by positive contributions from its new product offerings.
He said the group’s price increase of about 3% for selected plastic bottle products in Malaysia and a 10% price increase in Singapore were only affected towards the end of the quarter, thus whilst not having much impact during the current quarter, is expected to cushion the impact of the high costs in the coming quarters.
“Additionally, price volatility of fuel and plastic resin has stabilised, and we have started to see some easing in recent months, so that is a positive for us and the consumer market in general,“ he said.
Moving on, Loi said the group’s regional expansion strategy continues to gain momentum, particularly in Cambodia, where monthly export sales have grown significantly since it commenced exports in August 2025 and have now surpassed exports to Singapore.
“With our Cambodia manufacturing facility expected to commence operations in October 2026, we will be better positioned to serve the market more cost-effectively while expanding our UHT product offerings across Cambodia and the wider Indochina region.
“In addition, development of our Cambodia dairy farm has since commenced, which will further strengthen our long-term upstream capabilities to support regional growth.
“Our Philippines operations have continued to make encouraging progress, supported by stronger UHT sales and growing consumer acceptance of our pasteurised products in Manila.
“As plant utilisation improves, we expect the business to contribute more meaningfully to the group’s financial performance over the coming quarters,“ Loi said.
He also noted that the Bandar Enstek facility is in its final stages and is expected to commence operations within the next few months after all necessary approvals are obtained.
“Once operational, the factory will significantly increase our capacity to support continued growth in our CPG ice cream while also introducing more products such as tea beverages, juices, ready-to-drink plant-based beverages, bottled water and high-protein drinks.
“While our Enstek is still being completed, we have taken steps to increase Taiping plant ice cream output to 350,000 pieces per day following the installation of the second extrusion line and a new cone line.
“When operations at Bandar Enstek begin, we will relocate selected production lines from Taiping.
“The completion of the Amelia acquisition has also strengthened our distribution footprint in East Malaysia, providing us with an established logistics network to accelerate the rollout of our products across Sabah, Brunei and the surrounding markets, while creating opportunities to distribute a broader range of Farm Fresh products,“ he said.
On the upstream side, Loi said the group has completed the expansion of its Jacob Farm (Muadzam Shah 2 Farm), with 3,000 dairy cows expected to arrive in October 2026.
“This will more than double our Muadzam Shah farm capacity to over 7,000 dairy cows.
“Looking ahead, while geopolitical uncertainties and elevated input costs are expected to remain as near-term challenges, we are confident that the proactive measures which we have implemented, together with the continued expansion of our regional operations, production capacity and product portfolio, will continue to strengthen the group’s long-term growth prospects and support progressively stronger financial performance,“ he said.
