Dutch Lady Milk Industries Bhd. · MYX:DLADY
Dutch Lady Milk Industries Bhd — Shareholder Meeting (May 2023)
52 slides from Dutch Lady Milk Industries Bhd's shareholder meeting presentation, May 26, 2023
Slide 1: Dutch Lady Milk Industries Berhad 60th Annual General Meeting
Dutch Lady Milk Industries Berhad 60th Annual General Meeting 26 May 2023 © 2019 FrieslandCampina
Slide 2: Our Integrated Reporting Journey
Our Integrated Reporting Journey DLMI’s Maiden Integrated Annual Report 2023 WHAT: Integrated Reporting <IR> helps demonstrate how we are well-positioned to create value for both our shareholders and stakeholders in the short, mid, and long term. WHY: Beyond financial performance for the year, <IR>
Slide 3: Focus Areas 2022
Focus Areas 2022 Nourishing the Nation Shaping a Carbon Neutral Future Aspiring to be 100% Circular ● Nutrition and Product Energy, Water, Waste and Recovery and circularity Responsibility Emissions ● Innovation and Technology Striving to be 100% Responsible Catalysing Farmers & Communities Promotin
Slide 4: Achievement 2022
Better Better Better Better Better Better Better Nutrition Sourcing Climate Packaging People Society Governance Financial 96.4% 100% -1.7% Consumer Dairy 63% 4.35 million Company-wide Highlights 2022 of consumer dairy responsibly sourced/ Products of board positions, litres of raw fresh milk refresh
Slide 5: Key Priorities: 4Ps
Dutch Lady Milk Industries Berhad Key Priorities: 4Ps
Slide 6: PURPOSE
PURPOSE
Slide 7: Nourishing Our Planet and People in Every Stage of Life
Nourishing Our Planet and People in Every Stage of Life
Slide 8: Managing Director's core purpose
Name: Ramjeet Kaur Virik Function: Managing Director, Dutch Lady Milk Industries Bhd My Core Purpose is to energise others and enable everyone to achieve their full potential”
Slide 9: DLMI Management Team Members
DLMI Management Team Members
Slide 10: PEOPLE
PEOPLE =
Slide 11: Enabling Our People To Work Flexibly
Enabling Our People To Work Flexibly 2 days in the office OWOW Enabler and Monthly Focus Friday 3 days from home/anywhere Subsidy 11
Slide 12: Creating an Energised work environment
Creating an Energised work environment Happiness Corner Virtual Fitness Session Virtual Wellness Talk Self-Care Visual Health Screening Game Room
Slide 13: Keeping Our People Engaged
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Slide 14: Recognition for our HR Best Practices
Recognition for our HR Best Practices Malaysian Dutch Business Council 2023 Graduates' Choice Award - MISA 2023 - Winner of Best Flexible Winner of the FMCG category Work Arrangements Program • Voted by over 200,000 university • Judged by a panel of expert, students from private and public independe
Slide 15: PERFORMANCE
PERFORMANCE Winning Profitably
Slide 16: Key 2022 Macroeconomic Highlights
Key 2022 Macroeconomic Highlights Disruption from external Unstable Government since Increasing cost of doing conditions driving hyper- 2020 resolved via 15th business inflation General Election Higher commodities, inflation, higher Power struggle between Malay political Ukraine – Russia war causes
Slide 17: We continue to grow & be the leading dairy company in Malaysia
We continue to grow & be the leading dairy company in Malaysia +4.3% Dairy Manufacturer Value Share% 26.5 26.7 25.6 11.6 12.0 12.3 8.4 8.4 8.1 7.5 7.4 7.7 7.2 6.9 6.7 Dutch Lady Milk Industries Company A Company B Company C Company D 2020 2021 2022 18 Source: Nielsen, 2020-2022, data based on strate
Slide 18: Winning awards as Malaysia's Most Chosen Dairy Brand
Winning awards as Malaysia's Most Chosen Dairy Brand Won KANTAR’s Brand Footprint 2022: • Brand of the Decade • No. 1 Most Chosen Brand in the Dairy Category 19
Slide 19: Key FY 2022 financials versus 2021
Key FY 2022 financials versus 2021: Strong Volume and Revenue Growth breaking RM 1.3 Billion mark, offset by unprecedented cost inflation Adj. Operating Profit* Net Operating Free Net Sales -21.2% Cash Flow RM1.3 Bn RM114.2m +RM217.6m Record high RM202.8m Adj. Net Profit* -35.6% Net sales growth RM9
Slide 20: Profit before Tax
Profit before Tax: Strong Demand and Revenue Growth Management offset by the higher input cost and expenses. In RM mln -230.0 284.5 -28.4 (-19.9%) 142.2 29.5 38.1 86.5 142.3 114.0 9.5 25.0 34.4 54.6 2021 Footprint 2021 exlc. Volume RGM & Material A&P and 2022 excl. 2018-2021 Footprint 2022 impact Fo
Slide 21: Input costs
Input costs: Increasing price of Dairy Raw Materials and FX headwinds Skimmed Milk Powder Anhydrous Milk Fat Dec’22 vs Dec’21 +14% Dec’22 vs Dec’21 +33% Source: DLMI 2022, material costs Source: DLMI, 2021/2022 Raw Material Costs Source: DLMI, 2021/2022 Raw Material Costs USD/MYR Exchange Rate 2022
Slide 22: Cash Flow
Cash Flow: Strong cashflow from operating activities from business activities. Slightly Lower absolute cash balance on the back of investment activities. Cashflow from operating activities Cash balance In RM mln In RM mln +136.7 +217.6 (-923.8%) (-1,470.4%) -13.4 (-11.3%) 202.8 202.8 172.0 80.9 37.5
Slide 23: Dividend payment
Dividend payment Dividend of RM 0.25 per share in H1 and H2 2022. Dividend pay-out in line with 2021, to enable internal financing of future manufacturing facilities. Net Dividend pay-out vs Profit After Tax Net Dividend pay-out per quarter Profit After Tax Net dividend paid In RM mln Footprint prep
Slide 24: 25
25
Slide 25: Performance: We continue to focus on winning in the market in 2023
Performance: We continue to focus on winning in the market in 2023 Reinforce the trust and connection we have with our consumers & drive penetration Drive IFT relevance through category education and support the optimal growth of Malaysian children through MaxGro Drive relevance & penetration within
Slide 26: Commercial campaigns & activities focus on multicultural festive periods
Commercial campaigns & activities focus on multicultural festive periods Chinese New Year Ramadhan/Hari Raya Aidilfitri
Slide 27: We continue to excite & connect through new innovations & activities
We continue to excite & connect through new innovations & activities Friso Gold Dutch Lady Innovation
Slide 28: Key Q1 2023 financials versus Q1 2022
Key Q1 2023 financials versus Q1 2022: Excellent top line growth, yet profit under pressure of continuous cost headwinds Net Operating Free Adj. Operating Cash Flow Net Sales Profit* +RM 63.5m RM 354.3m -44.4% RM 48.7m RM17.9m Adj. Net Profit* -48.2% Adj. EPS* Net sales growth RM12.4m + 18.2% -48.2%
Slide 29: Strong business performance in Q1 2023
Strong business performance in Q1 2023 Revenue up 18% on the back of higher volume (+15%), yet raw material costs pressure on profit. Cashflow from operating activities Net Dividend pay-out In RM mln 2022 Q1 +18% 2023 Q1 2023 354 Dividends Announce on RM mln 26 May 2023 Standard 16.0 RM0.25 per shar
Slide 30: Profit before Tax: Q1 2023 vs Q1 2022
Profit before Tax: Q1 2023 vs Q1 2022 Strong Volume and Revenue performance but fully offset by increase in DRM -15.4 3.3 31.8 10.0 27.4 4.4 23.8 0.5 2.1 17.1 2.5 12.0 5.1 Q1 22 incl BB Big Blue Q1 22 Volume RGM & DRM Other Var A&P SG&A Q1 23 excl. BB Big Blue Q1 23 excl BB Effective Incl BB Spend 3
Slide 31: 2023 Outlook
2023 Outlook: Milk prices expected to soften, yet weak MYR and inflation remains a challenge. Consumer and business confidence bearish. Business Confidence Index Source: Global Dairy Trade, Mar 2023 Source: MIER USD:RM Jan-May 2023 Consumer Confidence Index Source:.XE.com, May 2023 33 Source: MIER
Slide 32: Potential: Our Future Legacy
Our Future Legacy
Slide 33: Increased investment in new Manufacturing Facility
Increased investment in new Manufacturing Facility • Investment increased from RM340 million to RM540 million • Additional growth CAPEX items • Inflation from increased cost of materials, fuel and labour 36
Slide 34: Dutch Lady Milk Industries Berhad
Dutch Lady Milk Industries Berhad =
Slide 35: Questions from MSWG
Dutch Lady Milk Industries Berhad 60th Annual General Meeting 26 May 2023 QUESTIONS FROM MSWG © 2019 FrieslandCampina
Slide 36: Operational & Financial Matters - Question 1 (a)
Operational & Financial Matters - Question 1 (a) The group recorded 18% increase in revenue from RM1.1 billion in FY2021 to RM1.3 billion in FY2022. However, the overall costs for raw materials went up by 10% -15% impacted the gross profit margin which declined from 35% to 27% as costs could only pa
Slide 37: Operational & Financial Matters - Question 1 (b)
Operational & Financial Matters - Question 1 (b) A cost optimisation exercise was implemented across the board to help mitigate a substantial portion of the impact of higher raw material costs (page 38 of IAR 2022). What were the major components costs saved or optimised during FY2022 that allowed o
Slide 38: Operational & Financial Matters - Question 1 (c)
Operational & Financial Matters - Question 1 (c) What is the management pricing strategy for FY2023, considering the prevailing market conditions, cost dynamics as well as keeping your products affordable to the B40 consumers who make up a large proportion of your customer base? Answer: For 2023 the
Slide 39: Operational & Financial Matters - Question 1 (d)
Operational & Financial Matters -Question 1 (d) What is the Company’s outlook on profit margins? Based on your assessment of market conditions and current pricing strategy, do you expect profit margins to normalize, stabilize or potentially improve in FY2023? Answer: • DLMI will stay focused on its
Slide 40: Operational & Financial Matters - Question 2 (a)
Operational & Financial Matters - Question 2 (a) The first Bilateral Advanced Pricing Arrangement (“BAPA”) between the competent authorities of Malaysia and The Netherlands with regards to certain related party transactions was finalised in 2022. This arrangement covers the years 2018 to 2022. Hence
Slide 41: Operational & Financial Matters - Question 2 (b)
Operational & Financial Matters - Question 2 (b) Will there be a second BAPA agreement to be entered into in 2023? If yes, what are the pricing formulas that could impact the Group’s profit before tax negatively? Answer: • It is in the company’s interest to maintain certainty on tax and transfer pri
Slide 42: Operational & Financial Matters - Question 3 (a)
Operational & Financial Matters - Question 3 (a) The Company has launched festive flavour Lychee Juicy milk and Kurma & Banana flavoured milk range (page 49 of IAR 2022). (a) What is the market response towards these products? What was their contribution to the group’s revenue in FY2022 and what is
Slide 43: Operational & Financial Matters - Question 3 (b)
Operational & Financial Matters - Question 3 (b) Is the Company planning to launch any new products in 2023? Answer: • We will continue to bring excitement to Malaysians with the Ramadan limited edition Kurma and Banana Pasteurized 1L, along with the UHT options. • To target the malnutrition issue a
Slide 44: Sustainability and Corporate Governance Matters - Question 4
Sustainability and Corporate Governance Matters - Question 4 Under the Sustainability Statement (page 69 of IAR 2022), DLMI had disclosed the achievement made in 2022 for energy intensity reduction, carbon footprint emissions reduction, water intensity reduction and landfill waste. There is no discl
Slide 45: Sustainability and Corporate Governance Matters - Question 5
Sustainability and Corporate Governance Matters - Question 5 Practice 9.4 -Step-up of the Malaysian Code on Corporate Governance (MCCG 2021) states that the Audit Committee should comprise solely of Independent Directors. DLMI in its CG Report 2022 states that it has not adopted the Step-up practice
Slide 46: Pre-AGM Questions from Portal
Dutch Lady Milk Industries Berhad 60th Annual General Meeting 26 May 2023 PRE-AGM QUESTIONS FROM PORTAL © 2019 FrieslandCampina
Slide 47: Are there any competitors taking up the market portion
Question 1 Are there any competitors taking up the market portion from your company as well as share investment from investors? If yes, may you share on the strategy been implemented to overcome this issue and the achievement along this 2 years. Answer: In 2022 Dutch Lady has extended its leadership
Slide 48: Enstek capex budget escalation
Question 2 Please share details of Enstek capex budget escalation from original ~RM300m to ~RM500m. What are the budgeting mistakes? Answer: The increase is mainly due to the inclusion of additional growth capex items as well as unprecedented inflation which has significantly increased the cost of m
Slide 49: Question 3(a) Board fee increment
Question 3(a) How would the management justify the increment for the board when your overall performance are way below your peers and industry? Answer: Taking into consideration the results of an exercise to benchmark the Non-Executive Directors’ fees and benefits against the fees and benefits paid
Slide 50: Question 3(b) Share performance and dividend rate
Question 3(b) DLady is 60% below the peak now comparing to last 5 years performance. Dividend rate had also been reducing year on year. What are the reasons for the bad performance? • Dutch Lady achieved consecutive Revenue growth over the past five years, with an encouraging 18% growth in revenue i
Slide 51: Question 3(c) Plan to improve performance
Question 3(c) What is the plan to improve the performance of DLady? • DLMI will stay focused on its purpose of ‘Nourishing Our Planet and People in Every Stage of Life’. In order to deliver on this purpose, healthy gross margins are essential for us to continue to invest behind our people and brands
Slide 52: Immediate target for raw milk purchase from local farmers
Question 4 What is the immediate target for raw milk purchase from local farmers and milk collection centres of DVS? Answer: DLMI will continue to support the growth of our local dairy farmers. As at today, we are one of the largest purchaser of local raw milk. Our supply comes from various local so
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