Based on the graph above, Dutch Lady Milk Industries Berhad has pay out a high dividend every year due to high cash flow they generate. (Victor Chng, 2015) Not only that, the dividend payout ratio is not consistent as some years increase in percentage and decrease. In the year of 2013, the company had completed their expansion plan with its four –hectare factor premises and this new facility can product better. So, the production will be increased to support the local and export orders. In year 2012, company kept the money as retained earnings held for growth of the company to do the expansion and now the expansion completed so in year 2013 company tend to paid high dividend to stakeholders. In the year of 2014, the percentage is increase by 8% compared to year 2013 due to high profitability and pay high dividend to sustain stakeholders.As we can see from the graph above, in year 2015 Dutch Lady Milk Industries Berhad’s dividend payout ratio had drop 28% from 128% to 100% due to Malaysia introduced Goods and Services Taxes (GST) on 1st April 2015.
Thus, there are too much of unforeseen circumstances so Dutch Lady Milk Industries Berhad kept money as precautionary purpose. On the other hand, the dividend paid by company is also decreased. In the year of 2016, the ratio still dropping another 6% to 94% due to higher raw material costs and the weak ringgit Malaysia. (Wong, 2017) The problem faced by company is the raw material for its product has increased between 25% to 30% due to the raw material is higher demand in China. Thus, company also take action by increased the price of its dairy products by 5%.
(Malaysian Reserve, 2017) In the year of 2017, increase 58% due to the company declared the first interim and special interim ordinary dividends which is extraordinary interim dividends is dependent on the company’s business profitability and operational needs during the year. (Annual report, 2017)