F&N records robust growth amid softer consumer sentiments

Fraser & Neave Holdings Bhd chief executive officer Lim Yew Hoe at the media briefing on the company's first half-year financial results ended March 31, 2015.

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) continued to record strong profit growth in the second quarter (Q2) ended March 31. At the half-year mark, the group had already achieved 86.5% of its total earnings in the last financial year. 

In its announcement to Bursa Malaysia on Wednesday, F&N reported a 28.5% increase in earnings to RM90.57mil for Q2, supported by its food and beverage businesses in Malaysia and Thailand.

Revenue was also higher at RM999.17mil, up 6.31% from RM939.89mil previously.

The company said revenue from its food and beverage business grew by 8.4% to RM631.5mil from RM582.7mil the previous year, driven mainly by higher sell-in of its core products, stemming from its Chinese New Year festivity-driven consumer and trade marketing programmes. 

“Among the various festivity programmes executed, the 100Plus gold-themed ‘prosperity’ can promotion, in particular, was well received by consumers,” it said.

However, the company noted a higher degree of discretionary spending by consumers, resulting in higher trade discounting by competitors and thus, impacting gross margins. 

It added that new product offerings from competitors had also increased the local competitive landscape.

F&N said operating profit for food and beverages in Malaysia was up 26.5% to RM64.3mil from RM50.8mil on higher revenue contribution, favourable milk-based global commodity prices and  improved manufacturing efficiencies.

For the business in Thailand, the company said revenue was up 3.3% to RM367.9mil from RM356.2mil on the back of its increasing network and distribution points, branding programmes and effective execution of trade and consumer marketing campaigns.

Operating profit increased to RM41.2mil from RM34.1mil on higher volumes, favourable product mix, lower trade discounting, favourable milk-based commodity prices, higher manufacturing efficiency and favourable baht foreign currency conversion, it said.

For the first half of the year, F&N reported a significant 72.5% jump in net profit to RM242.23mil, while revenue was up by 3.86% to RM2.05bil.

Comparatively, in the last financial year ended Sept 30, 2015, F&N made a 7.8% higher net profit of RM280.1mil on record revenue of RM4.06bil.

The board has declared an interim dividend of 27 sen per share (2015: 22 sen) for this financial year.

F&N shares fell 22 sen to close at RM22.18 on Wednesday, with 677,700 shares changing hands.