By NG MIN SHEN
Fraser & Neave Holdings Bhd (F&N Malaysia) saw its net profit for the third-quarter ended June 30, 2017 (3Q17), fall 25.8% to RM69.37 million from RM93.55 million recorded in 3Q16, due to the weak consumer sentiment, competitive pricing pressure and higher material costs.
The food and beverage (F&B) company in a filing to the exchange yesterday said revenue fell slightly to RM1.04 billion in 3Q17 compared to RM1.11 billion previously, largely due to lower revenue from its F&B Malaysia segment. This was also due to the continuing weak consumer sentiment during the Hari Raya festive season, coupled with an intense pricing pressure from competitors.
The F&B Malaysia segment also reported a 61.3% decline year-on-year (YoY) in operating profit from RM62.6 million to RM24.2 million caused by the lower revenue, higher input costs, particularly sugar and restructuring costs.
Lower domestic sales and operating profit were slightly offset by the growth in F&B Malaysia’s exports and lower trade spending.
Meanwhile, the F&B Thailand segment saw a slight YoY decrease in operating profit from RM52.8 million to RM51.5 million as a result of higher raw material costs, partially mitigated by cautious trade spending.
F&N Malaysia said it expects the domestic business environment to remain challenging, with continuing weak consumer sentiment and intense price competition.
“Input costs in the near to mid term for F&B Thailand and F&B Malaysia are expected to increase following the uptrends in packaging cost, milk powder and sugar prices,” it said.
The company said it will continue to be vigilant and responsive to changes in the external environment, with action to be taken where necessary.
“This includes reviewing our cost structure to maintain long-term sustainable growth and continuously grow the export pillar,” it said.
F&N Malaysia’s shares closed four sen higher at RM24.82 yesterday, with a market capitalisation of RM9.098 billion. The stock saw 1.15 million shares traded.