PETALING JAYA: Fraser & Neave Holdings Bhd
(F&N) believes that conditions for its food and beverage arm in Indochina (F&B Indochina) will stabilise moving forward as economic activity normalises and trade channels in Thailand replenish stock levels.
The group, whose F&B Indochina operations include Thailand, Cambodia and Laos, said its new dairy manufacturing facility in Cambodia, which is expected to become operational by end-March 2026, would help restore supply continuity.
“Together with exports from Malaysia, this would also support an improvement in sales in Cambodia,” it said.
In the first quarter ended Dec 31, 2025 (1Q26), F&N recorded a net profit of RM112.2mil, representing a year-on-year (y-o-y) decrease of 33.6%, as earnings per share stood at 30.6 sen.
This was in line with the 6.2% slide in top line to RM1.3bil, which the group said reflected the mixed performance from F&B Malaysia and F&B Indochina.
“Despite certain channel activities shifting to 2Q26 due to this year’s later Chinese New Year shopping window, F&B Malaysia achieved 5.6% revenue growth, which partially offset the 20.9% decline in F&B Indochina due to softer market conditions and prolonged border closures,” F&N explained in a filing to Bursa Malaysia.
It pointed out that group operating profit for 1Q26 declined by 25.5% to RM181mil, mainly due to an unfavourable foreign exchange (forex) impact of RM26.5mil during the quarter, and that excluding the forex impact, group operating profit would have declined by 15.8% y-o-y.
At the same time, the group said F&B Malaysia’s operating profit, excluding forex impact, was broadly in line with the corresponding quarter, supported by increased brand investments.
“Operational costs at the integrated dairy farm remained stable as operations continued to scale up. In contrast, F&B Indochina’s operating profit weakened by 31.8%, in tandem with the decline in revenue,” said F&N.
As such, lower operational profit, reduced finance income and a higher effective tax rate - which was driven by higher withholding tax and non-recognition of deferred tax assets in respect of the dairy farm losses - were attributed as the primary reasons for the decline in the bottom line.
Meanwhile, compared to the preceding quarter ended September 2025, F&N said revenue grew by 6.2% from RM1.23bil, driven primarily by higher F&B Malaysia sales from the commencement of festive sell-in activities in selected channels and sales recovery in East Malaysia, while revenue for F&B Indochina was flat amidst the continuing Thai-Cambodia border closures.
That said, net profit remained flattish quarter-on-quarter, compared with the RM114.3mil achieved in 4Q25, due to unfavourable forex impact as well as higher marketing expenditure and promotional campaigns to drive festive sales in 1Q26.
Looking ahead, F&N noted that while currency volatility remains a headwind, its impact is anticipated to moderate over the coming quarters, supported by continued cost discipline, operational efficiencies and hedging strategies.
“F&B Malaysia’s contribution to the group’s performance is expected to be stable and help mitigate softness from F&B Indochina as conditions there gradually improve.
“The second quarter will benefit from the overlapping Chinese New Year and Hari Raya sell-in cycles, together with continued brand-building initiatives and the wider distribution of Magnolia fresh milk,” it added.
