DUTCH Lady Milk Industries Bhd (Dutch Lady Malaysia) is gearing up for the implementation of the goods and services tax (GST), which will come into effect in April next year.
Managing director Rahul Colaco said as of now, the impact of GST cannot be assessed as it depends on product demand and other factors.
“The financial impact of GST will be hard to judge right now, but we will upgrade our systems and processes and focus on making the brand relevant,” said Colaco after the group’s annual general meeting, here, yesterday.
Also present was chairman Datuk Zainal Abidin Putih.
Colaco said the company will maintain its capital expenditure (capex) at RM18 million.
He said the capex will be used to improve food safety and the product systems.
“We have allocated capex to improve different elements of our product quality and safety.”
Dutch Lady Malaysia posted a net profit of RM23.06 million on the back of RM227.68 million revenue in its first quarter ended March 31 2014.
Higher raw material prices had impacted the company’s profits.
Colaco said the company has increased the price of its products by between five and eight per cent in January.
“We will continue to improve operational efficiency and look at ways to minimise costs.”
Colaco said structural demand and supply imbalance will continue to put upward pressure on raw material prices.
In view of the softening of consumer spending and declining growth in fast-moving consumers goods, the company is cautiously optimistic about this year.
“This year is extremely challenging for us, with high prices of raw materials, foreign exchange pressure and less robust consumer confidence. However, we aim to maintain our performance,” said Colaco, adding that the company remains committed to leveraging the strength of the Dutch Lady brand and harnessing its operational efficiency.
Dutch Lady Malaysia will continue with strategies to address issues of national importance, such as balanced nutrition, social and environmental responsibility and dairy self-sufficiency.