Farm Fresh Bhd's shares took a hard hit after posting a lower net profit for the financial year 2023 (FY 2023).

At 11 am, the counter slid by 11 sen to RM1.44 with 8.4 million shares traded.

In a filing with Bursa Malaysia yesterday, the dairy company reported that its net profit dropped to RM50.08 million in FY2023 from RM79.89 million last year due to an increase in input costs, including key dairy raw materials, labour costs, high farming costs and high energy costs.

However, revenue was higher at RM629.69 million versus RM501.92 million previously, driven by higher school milk sales, coupled with higher sales of ready-to-drink milk products and the positive impact from the launch of new products.

In a note today, RHB Research said it had reduced Farm Fresh's FY2024 earnings forecast by 11 per cent but kept the FY2025 forecast materially unchanged.

"We view the gradual easing of cost pressures, its cost pass-through, and new capacity coming on-stream to be the key factors driving its earnings recovery in FY2024.

"We continue to like Farm Fresh for its established brand equity and robust market share gains - underpinned by quality product offerings as well as its ambitious expansion plans to facilitate deeper market penetration," it said.

 - Bernama