kuala lumpur: Fraser & Neave Holdings Bhd (F&N) is committed to F&N Agrivalley, a high-tech integrated dairy agriculture project, Gemas, Negeri Sembilan.
CEO Lim Yew Hoe said the target is reaching profitability within three to five years.
“The first phase of the venture will focus on expanding up to 10,000 milking cows, part of a broader plan to reduce Malaysia’s dependence on imported dairy products and position the company as a major player in the region’s milk supply.
“Our RM1.8 billion venture reflects a long-term strategy to reduce dependence on imported dairy products and increase self-sufficiency in raw milk supply. Phase 1 will focus on reaching 20,000 breastfeeding cows in the end.
Of the RM1.8 billion capital expenditure, about RM600 million was spent on facility infrastructure, while less than 100 million people were allocated to cattle procurement, Lim said.
“Other costs were directed towards manufacturing, equipment and dairy processing capacity. Asset depreciation is expected to begin in the short term as an operational scale. The project spans approximately 10 barn units (BUNs), with the first 2,500 cattle already taking up their initial capacity.
“A complete ramp up across all facilities is expected to take about three years, alongside the progressive cattle supply and milk production cycle.”
Lim noted that feed cost control is the biggest variable affecting the timeline to profitability.
“We have started planting more than 500 hectares of corn silage, and we plan to double the acreage next year. However, full self-sufficiency in feed, covering 40% of total dietary needs, can only be achieved by 2026.
“The Malaysian climate allows us to plant 2.5 cycles per year compared to a single cycle in the US. This helps feed efficiency and even gives us a lower cost structure than American farms,” he added.
Animal welfare is at the heart of F&N’s strategy, Rim said, as the barn is equipped with noise-attenuated fans, an immersion system for cooling, and a rubber mattress designed to mimic the comfort of the Tempur Pedic.
“We invested heavily in comfortable technology. The cows are not stressed. This leads to increased productivity and lower mortality.”
Lim confirmed that F&N resolved previous sourcing issues, including US cows, and instead chose to continue sourcing US cows.
“Chilean cows are genetically closer to their American host countries and produce more milk per day than Australian and New Zealand varieties,” he said, adding that lower cows require more barns, which will negatively affect internal return.
Lim said F&N is taking advantage of incentives from the Treasury Department, allowing tax differences to be tailored to the size of capital investments.
“We can see that we account for biological assets such as cattle based on fair value, as there is a change in reaching the cost of goods sold depending on productivity and market value. The future profit or loss of biological assets will be reflected in accordance with general accounting guidelines,” he added.
Looking ahead, Lim said F&N is establishing a dairy processing factory in Cambodia under its Thai subsidiary.
“This decision was driven by the established market base of the group in Cambodia and the lower entry barriers compared to larger markets like Vietnam.”
Regarding global risks such as a surge in US beef demand, Lim noted that price of cattle fluctuates, but its selective genetic sourcing model and long-term supplier partnerships can help reduce exposure.
F&N increased its operating profit by 4.3% year-on-year to RM434.8 million in the first half of the first half (H1’25), which ended on March 31, 2025.
Group revenues increased by 1.4% to RM2.72 billion in H1’25, up 1.4%, supported by a strong export momentum through the wide range of sales growth across the business unit, particularly the Food & Beverage Indochina segment in Cambodia.
Pre-tax profit improved to RM430.1 million, 4.9% year-on-year, due to better margins and careful advertising spending. However, after-tax group profits fell 7.6% to RM310 million, impacting the full use of the Investment Committee incentive for Indochina operations.
In the second quarter alone, group revenues fell 1.4% to RM1.33 billion, due to inventory adjustments in Thailand, as sales were slower in Malaysia during the expected festive season. As a result, quarterly operating profit fell 7.6% year-on-year.
F&N has declared a provisional single-tier dividend of 30 sen per share, equivalent to approximately RM110 million, to be paid on May 30.
