Fraser & Neave Holdings Bhd (F&N) has proposed a total net dividend of 20 sen per share for the year ended Sept 30, and coupled the announcement with an assurance that future dividends would be maintained at “a good rate”.
F&N chief executive officer Tan Ang Meng told a press conference in Kuala Lumpur yesterday the company had sufficient reserves to continue paying good dividends.
“We had been conservative in the past in so far as our dividends were concerned,” he added.
With its net cash having increased to RM221mil, F&N could afford to maintain a good dividend rate irrespective of any future investments, he said, noting that the company's interest cover was about 1.3 times and, given its shareholders' funds of RM1bil, it could easily gear up by RM400mil to RM500mil, if necessary.
F&N's generous dividend declaration for FY02/03 – a record payout for the company – coincides with its 120th anniversary this year, which also saw it achieving a record turnover of RM1.6bil. This was a 6% increase over the previous year's RM1.5bil.
For its financial year ended Sept30, the company posted an operating profit of RM141mil. Its profit after tax grew 17% to RM112.7mil, from RM96.3mil the prior year.
However, an exceptional loss of RM19.8mil arising from the disposal of the group's 25% interest in an associated company, Harmonic Fairway Sdn Bhd – a joint venture between F&N and Malaysian Resources Corporation Bhd to acquire a property at KL Sentral – pulled its after-tax profit down to RM93mil, or 3% lower than the RM96.3mil achieved the year before.
Consequently, earnings per share dropped to 23.5 from 24.6 sen. However, net tangible assets per share grew to RM2.80 from RM2.73.
On a segmental basis, soft drinks accounted for 53% of F&N's sales, dairy products 30%, and glass 17%.
Tan said F&N was looking at possible investments in the Asean region, but if it could not find anything suitable, it would return the excess cash to shareholders.
Capital expenditure in the current year is estimated at some RM160mil, of which RM60mil is earmarked for the rebuilding of two existing glass furnaces, one in Vietnam and the other in Johor Baru. Another furnace in Johor Baru is to be closed.
On prospects for the current year, Tan said the positive regional and local economic outlook would boost F&N's revenue. Moreover, the full impact of production at its China glass factory would add to top-line growth, contributing an expected RM60mil in revenue. (It currently contributes some 23% in volume and 10% in revenue of RM30mil).
In the first or second quarter of the current financial year, development work would start on the company's Jalan Foss property in Sungei Besi, he said.
In the first phase, F&N would build shop-lot offices on 50% to 60% of the 20 acres of land over the next three years at a total development cost of RM180mil.
The firm would look into “niche development” for the rest of the land, Tan added, pointing out the existing Sungei Besi airport meant that buildings could not exceed six storeys.