F&N expects AgriValley to take several more years to break even

Traders Union
All News
Business & Wealth
Companies
F&N AgriValley breaks even

Highlights

F&N says AgriValley will need several more years to break even, prioritizing operational stability and cost efficiency before expansion.
Operating profit in the Malaysia segment fell 80.2% to RM15.84 million in the fourth quarter of FY2026, despite a slight 0.9% increase in revenue to RM737.82 million.
F&N shares rose RM1.02, or 4.81%, to RM22.24 on Friday, but the share price is still down 36.82% year to date.

This article was translated from the original. Read the original version by our correspondent here.

Operational priorities before expansion

As reported by The Edge Malaysia, F&N chief executive officer Tarang Gupta said AgriValley is expected to take several more years to break even, with no specific timeline given as the group focuses on stabilizing operations. He said the current priority is to improve productivity and cost efficiency at the dairy farm before moving into a larger-scale expansion phase.

According to Gupta, profitability depends on several factors related to scaling up operations, including milk production, herd expansion, animal breeding, feed costs and weather conditions. He stressed that F&N was not prepared to accelerate expansion before achieving greater operational stability, as doing so could drive up costs.

The farm’s milk yield is now stable at more than 30 liters per cow per day, but the group is still working to improve breeding cycles and reduce feed costs. AgriValley currently has about 8,000 cattle, around 3,000 of which are milk-producing.

The group has also begun harvesting crops for animal feed, although output remains inconsistent due to changing weather conditions. Gupta said existing infrastructure can support a larger herd, and further investment will be made in stages rather than through another large upfront capital commitment.

Pressure on earnings and market sentiment

The dairy farm’s operating costs continue to weigh on F&N’s Malaysian business, which recorded an 80.2% drop in operating profit to RM15.84 million for the fourth quarter ended 30 Sept 2026, from RM79.94 million a year earlier, despite a 0.9% increase in revenue to RM737.82 million. For the full financial year, operating profit in the Malaysia segment fell 28.3% to RM200.87 million, while revenue rose 3.3% to RM3.06 billion.

A weaker contribution from AgriValley, together with disruptions to Indochina operations, contributed to a 14% decline in group net profit to RM437.09 million for FY2026, from RM508.47 million a year earlier. Group revenue also fell 5.3% to RM4.92 billion.

Animal feed remains the largest variable cost in the dairy operation, while higher milk production is seen as important for spreading the farm’s substantial fixed costs across greater output. Gupta said the group needs to go through more farming and breeding cycles before it can more accurately assess the dairy operation’s long-term profitability.

F&N shares rose RM1.02, or 4.81%, to RM22.24 at the midday trading break on Friday, giving the group a market capitalization of RM8.16 billion. However, the company’s share price is still down 36.82% year to date.

In our earlier report on weakness in the stock market in Malaysia, we highlighted the FBM KLCI’s decline as concerns about US inflation and the interest rate outlook once again weighed on investor sentiment. We also noted selling pressure in technology stocks such as YTL Power and ViTrox, as well as persistent foreign net selling that added to the pressure on the local market.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.