PETALING JAYA: Dutch Lady Milk Industries Bhd, which is gaining market share, is on track to hit RM1 billion sales in the next financial year ending Dec 31, 2013.
“As my predecessor mentioned, it was our ambition when we defined our strategic long-term plan, to hit RM1 billion sales in three years; we started the programme in 2010.
“We are on track to fulfil that ambition in a three-year time frame. So we hope to achieve that next year. We can make it earlier if we can get more Malaysians to drink our milk,” said Dutch Lady managing director Rahul Colaco.
As at 2011, Dutch Lady had an 18.6% share of the dairy milk market, up from 18.1% in 2010. In the children’s milk segment, Dutch Lady had the second largest market share with 22% while Dumex was ahead with 23%.
In the liquid milk sector, Dutch Lady is the leader with a 50% market share with its nearest competitor being Nestle with 20%. In 2011, the dairy market grew by 8.5% but growth has since slowed to about 6% in the last four months.
“We are growing faster than the market and are gaining market share. Our mission is to gain market share,” said Colaco.
He declined to comment on whether the company is expecting another record-breaking year for its pre-tax profit.
For FY11, Dutch Lady, which will be celebrating its 50th year in Malaysia next year, posted a pre-tax profit of RM141.55 million, up 57% from RM90.1 million in 2010. Revenue was RM810.65 million and net profit RM108.08 million.
Colaco reiterated that the company’s ambition is to focus on growing the market and out-gaining its competitors in market share. It will also continue to invest in market activities to support its brands and top line growth.
On how the company can be cost effective at a time when raw material prices are volatile, Colaco said as part of the Friesland Campina group, Dutch Lady has a lot of support from the global procurement team that helps in buying raw materials at the right time and the right price.
“This helps us a lot and [we]hope it will give us some competitive advantages in having slightly better purchase prices than our competitors,” he said, adding that supply of fresh milk from Malaysia only meets 3% to 4% of the total requirement, with the bulk of the supply coming from Europe, Australia and New Zealand.
Colaco said Dutch Lady will limit its price increases to very selective items. It is likely to be less than a 2% hike compared with the 5% hike for some of its products last year.
He said the company is expanding capacity for its liquid milk production as business has grown significantly.
“In the recent past we have been having double digit growth in the liquid milk segment. We increased capacity in 2011. In the course of next year, we will have to increase our capacity in liquid milk once again,” said Colaco, adding that the process of procuring and adding new lines will begin this year.
On whether there would be any bonus issue, Dutch Lady chairman Datuk Zainal Abidin Putih said there is no need to do so presently.
This article appeared in The Edge Financial Daily, June 14, 2012.
