F & N's milk production plan for January next year was drastically cut, impacting the company's cash flow.

During the performance announcement yesterday, F & N announced the bad news that the plan to introduce cows was halted by the veterinary bureau. Group CEO Lim Youhe further explained today that the timing to introduce pregnant cows is crucial. With the original plan terminated, it will take at least 6 to 12 months to introduce new cows.

The cows were unable to arrive in Malaysia as planned, but the construction of the integrated dairy cattle farm continues as scheduled. Lim Youhe pointed out that the main impact on the group is not on profit or loss, but on cash flow.

"The farm cannot start operating, therefore no revenue can be generated, and the equipment incurs no depreciation costs while not in use."

He also explained that the farm will maintain basic operations, and the grain planting will continue running.

"Grain will be planted next month, and the first harvest is expected in April. If the cows had arrived in Malaysia at that time, they could have consumed the fodder produced by us."

Regarding this incident, Lim Youhe also explained that following the import permit received in September, the transportation of pregnant cows was being prepared.

"During this period, the cows were in isolation. However, just two days before boarding for export, on October 24, we received a letter from the veterinary bureau canceling the previously obtained import permit."

"The response time is too short, and we did not have time to explain to the Malaysian authorities. Even if there was time to explain, the livestock transport ship did not have time to wait. In order to avoid being charged a huge compensation by the next customer, the shipping company has left Washington Port on Monday and headed to australia to handle the next customer's order."

He explained that as a result, 2500 pregnant cows will be sold locally. The group is currently working hard to mediate with the Malaysian authorities.

If the final authorities still do not approve the entry of American cows, the company will start looking for more breeds of cows genetically similar to American cows.

"We are determined to introduce high-quality breeds of cows. Although australia is closer to us, the average daily milk production of cows in australia is only 25 liters, while American cows can reach a potential of up to 40 liters, with an average milk production of 30-35 liters."

He also pointed out that he hopes this matter can be resolved within 6 months in order to arrange the next transportation as soon as possible. However, if the opportunity is missed, the monsoon season from April to September, due to rough sea conditions, is not suitable for transporting live animals. There might be a delay of 1 year until the farms can start producing milk.

The government announced several policies in the 2025 financial budget, including raising the tax on sugary drinks, increasing the minimum wage, and mandating foreign workers to contribute to the provident fund, which is expected to increase f & n's costs by nearly 7 million ringgit.

Lim Youhe explained at today's press conference that the company will try to absorb the tax on sugary drinks, therefore expecting an additional expenditure of 1.2 million ringgit.

Nevertheless, he emphasized that the F & N Group is actively improving formulas, striving to reduce sugar content, and only a few products will be subject to sugar tax.

Financial Director Zhang Yan Yao also pointed out that the policies of raising the minimum wage and requiring foreign workers to contribute to the provident fund are expected to affect 29% of the company's employees, leading to a labor cost increase of 5.4 million ringgit.

In the just-concluded 2024 fiscal year, F & N Group achieved an annual revenue of 5.246 billion ringgit, a year-on-year increase of 4.88%; net profit increased by 1.09%, earning 0.543 billion ringgit.

F & N Group held its performance briefing and factory tour for the first time at the Shah Alam factory, which is the first in Malaysia to use an Automated Storage and Retrieval System (ASRS) and is also the largest in scale.

The entire warehouse facility has 0.05 million shelves, totaling 17 levels high. After obtaining items from the production department, no manual handling is required, the system will automatically record the shelf where the item belongs, and transport it automatically.

The company has a total of 14 production lines, producing 350 types of products. In addition to cold filling, there are also hot filling lines. All beverages will be filled into bottles immediately after being molded in plastic bottles to avoid contamination.

The cold filling line can produce 1000 bottles of beverages per minute, while the hot filling line has a slower production speed.

Currently, the factory runs 24 hours a day and operates 6 days a week.