F&N’s profit jumps 50.6% in 3Q18

By NG MIN SHEN / Pic By ISMAIL CHE RUS

Fraser & Neave Holdings Bhd’s (F&N Malaysia) net profit surged 50.6% to RM104.5 million in the third quarter ended June 30, 2018 (3Q18), from RM69.37 million reported a year earlier, boosted by the food and beverage (F&B) businesses in Malaysia and Thailand.

The company said operating profit for its F&B business in Malaysia more than doubled to RM49.1 million in the current quarter from RM24.2 million a year ago.

“This was mainly due to operational cost savings and lower overheads as there were restructuring costs of RM9.6 million in the previous quarter and favourable input cost for sugar, while other dairy-based input and packaging material costs are on the rise.

“This was partly offset by higher advertising and promotions expenditure for the festive season,” the company told Bursa Malaysia yesterday.

Operating profit for F&N Thailand improved 11.4% to RM57.4 million in 3Q18 from RM51.5 million last year, mostly due to favourable input and packaging material costs for the quarter.

However, group revenue for 3Q18 slipped 1% to RM1.03 billion from RM1.04 billion registered last year, mainly due to lower revenue from F&N Thailand.

“F&N Thailand revenue declined 2.9% to RM435.4 million from RM448.6 million due to continuing challenging domestic market conditions exacerbated by intensive price competition, partly mitigated by higher export sales,” the company said.

Current quarter revenue for F&N Malaysia grew 0.3% to RM594.1 million from RM592.5 million previously, as domestic sales for the quarter were affected by lower consumer spending and slower off-take after the Hari Raya festive season, offset by double-digit growth in exports.

Going forward, the F&B firm expects the business environment in Thailand to remain challenging with intensifying competitive price pressure.

“In Malaysia, the management will monitor the impact of the reintroduction of the Sales and Services Tax on Sept 1, 2018, on the pricing of products,” it said.

Raw and packaging material prices in subsequent quarters are anticipated to remain volatile following the uptrends in packaging and milk-based commodity prices, compounded by the continuing high level of oil prices.

The group has hedged its core commodity requirements for the financial year along with the corresponding foreign currency exposure, wherever possible.