Dutch Lady remains positive on expansion plans

The Star

12-05-2025

DLMI finance director Kai De Klerk
PETALING JAYA: Dutch Lady Milk Industries Bhd (DLMI) remains positive on its growth plans for this year, especially with its DLMI@Enstek manufacturing facility in Negri Sembilan accelerating to achieve its full potential in the next two years.
The dairy company relocated its facility in Petaling Jaya to the 13-ha DLMI@Enstek manufacturing facility last year.
The new facility is three times larger in land size and twice as large in capacity to its previous DLMI@PJ facility.
Despite being optimistic of its prospects, DLMI finance director Kai De Klerk noted that the regulatory landscape is fast evolving, creating new pressures and novel challenges.
'This includes the increased cost of energy in the coming years as the subsidies continue to drop. Additionally, with the possible introduction of the carbon tax on the energy industry towards 2026, we may see a further increase in the prices of energy in Malaysia,' he said in the company's annual report.
De Klerk said tax changes may also impact costs to businesses. 'For instance, we may see a possible expansion of the scope and definition of services that were affected by an increase of the sales and service tax in 2024 from 6% to 8%.'
Additionally, he said the increase in the excise duty rate for sugary drinks starting Jan 1, 2025 by 40 cents per litre, is not expected to impact DLMI in the immediate term.
'The raise in the minimum wage from RM1,500 per month to RM1,700 per month, effective from Feb 1, 2025, as well as the mandatory Employees Provident Fund contributions for foreign labour may directly or indirectly impact our costs, either from higher costs of labour or from higher costs of products and services procured by the company.'
Amid these real or potential transition risks, De Klerk said DLMI will continuously assess the policy and regulatory landscape and specifically, their cost impacts on the company's business and stakeholders.
'In response, we will align our operations with the emerging standards and requirements, managing cost implications.
'We will also focus on cost optimisation and competitiveness, for which we have designed a fit-for-purpose organisation and have a global programme in place to realise savings in our operations and supply chains network.'
De Klerk said DLMI is also monitoring the determinants of an imminent shift in governance of the dairy sector, where it is constantly seeking opportunities to engage with the government and policy makers to participate in shaping future regulations that address critical aspects, such as food safety and food security.
De Klerk said DLMI's strategy will be to monitor consumer sentiments as well as industry trends and focus on core products that will help increase penetration, achieve volumes and deliver moderate growth to its topline.
'We will also need to adjust short-term approaches where necessary to ensure access to nutrition, optimise costs across the board to deliver affordability and ultimately, drive performance and preserve value for our shareholders and stakeholders.'