Dutch Lady Malaysia - Dutch Lady Milk Industries

Introduction

Dutch Lady Milk Industries Berhad ("Dutch Lady Malaysia") is a leader in the quality branded dairy business in Malaysia. It was incorporated in 1963, and was the first milk company in Malaysia to be listed on Bursa Malaysia, the local Stock Exchange in 1968. Its holding company is Royal FrieslandCampina, a Dutch multinational corporation and one of the largest milk companies in the world.

DLM manufactures and sells a wide range of quality dairy products and fruit juices for the home and export market such as Infant Formula, Growing-up Milk, Powdered Milk, Condensed Milk, UHT Milk, Sterilised Milk, Pasteurised Milk, Cultured Milk, Yoghurt and Fruit Juice Drinks. The Company's dairy products have a strong consumer following and are represented by strong brands such as Dutch Lady, Frisolac, Friso, Completa, Omela and Joy.

Besides supporting local industries by using substantial amount of local ingredients in its products, DLM is also the largest purchaser of local fresh milk from the Veterinary Services Department. This is done via the Company Dairy Development Program, carried out in collaboration with the DVS with the assistance of the Netherlands Embassy.

Corporate Mission

Helping Malaysians move forward in life with trusted dairy nutrition.

Corporate Vision

To further strengthen our position as the leading dairy company, driving growth.

Financial Highlights

Revenue

Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income. There is an increasing of Dutch Lady's revenue from RM 513'650'000 in year 2006 to RM 711'567'000 in year 2008, but slightly decrease in the year 2009 to RM 691'847'000 and in the year 2010 has increasing back to RM 710'588'000, which showing in the graph above.

Profit Before Tax

Profit before tax is the amount of profit that the company had earned before deducting the taxes. The graph has shown that Dutch Lady has an increasing of profit before tax from RM 59'930'000 to RM 64'780'000 between the year 2006 and 2007, but then decrease to RM 57'858'000 in year 2007. After that it has increase in both of the year 2009 and 2010 with the profit of RM 90'104'000 in year 2010.

Net Dividend Paid

Net dividend is the value of a dividend after the recipient has paid tax on it. In the graph above is showing that there is a slide increase in the year 2006 to year 2007, which is from RM 40'416'000 to RM 40'944'000. But, there is a fall in the year 2008 with the amount of RM 8'320'000, and it has increased back to a better figure in year 2009, which is RM 42'000'000 then increase to RM 46'400'000 in the year 2010.

Earnings per Share

The graph above showing Dutch Lady's earning per Share. It is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Its showing that the figure keep on fluctuating between the year 2006 and 2008 around the figure of RM 67'000 and RM 74'000. After that, it increase rapidly in the year 2009 to RM 94'000 and slightly increase to RM100'000 in year 2010.

Beta Analysis

Share Price

The graph on above is showing that the share price of Dutch Lady Milk Industry Berhad (DLM) from the year 2006 to the year 2010. It is showing that the share price has an obviously increase from RM 6.35 in the year 2006 to RM 12.20 in the year 2007. This is because of Dutch Lady has received Reader's Digest Trusted Brands Gold Awards, where Malaysian consumers voted Dutch Lady as their preferred brand in milk products for 9 consecutive years in the year 2006. After that, there is just a slight increase in the year 2007 and maintain constant until Jun 2008 with the price RM 12.50. Then, it fall to RM 8.45 on October 2008. This is cause by global financial crisis, which is inflation on price for everything in the market. In the economical way, as most of the product from Dutch Lady has the price elasticity demand of elastic, its means that if the product selling price increase, the quantity demanded of the product would be decrease and the revenue will also decrease and vice versa. So, the increasing of price in the market has caused the decreasing of quantity demanded and this make the investors lose the trust of the company and make the company's share price fall. After that, the economic is started to resume in orderly and the price has growing up to RM 9.10 in year 2009. Then, according to the effective strategies that have done by the company, and gain back the invertors' trust, the share price has increase to RM 11.90 in year 2010.

Ratio Analysis

Operating Margin

Operating margin also known as net profit margin used to measure a company's pricing strategy and operating efficiency and it is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production

The graph on above show that DLM has an operating margin of 11.67%, which means, it makes almost RM 0.12 before tax and interest for every ringgit of sales in year 2006. But, it keeps on decreasing to RM 0.11 in 2007 and RM 0.08 in 2008. This may because the milk scandal mostly in China and Singapore, which founded that there is high contain of melamine in milks, which can caused increased kidney stones in babies and birth defects. This make the product have to off the shelves, and this has caused the production demand and then decreasing of profit and revenue. After the milk scandal has been slow down gradually, it has increasing back to RM 0.12 year 2009