1Q revenue rises to RM1.1b on higher contribution from F&B segment in Thailand and Malaysia 

By ASILA JALIL / Pic By TMR File

FRASER & Neave Holdings Bhd’s (F&N) pro t increased 4.5% year on-year (YoY) to RM128.37 million in the first quarter ended Dec 31, 2019 (1Q20), from RM122.86 million previously, on stronger sales in its local and Thailand markets.

Quarterly revenue rose 10% YoY to RM1.11 billion in 1Q20 from RM1.01 billion recorded in the preceding year, attributed to higher contribution from the food and beverages (F&B) segment in Thailand and Malaysia, which subsequently lifted the group’s earnings.

Earnings per share increased to 35 sen from 33.5 sen in the same period last year, the group said in an exchange filing yesterday.

It said F&B Malaysia’s revenue increased 5.7% YoY to RM584.97 million in 1Q20 from RM553.45 million previously, supported by earlier sell-in for Chinese New Year, driven by higher sales of beverages.

The segment was also boosted by the launch of new products and new pack types, as well as double- digit growth in export revenue arising from growth in Africa, Asean countries and the Greater China markets.

This was offset by higher discount in the canned milk segment due to competition and the adverse impact of monsoon and flooding on East Coast sales.

Meanwhile, operating profit for F&B Malaysia declined 7.2% YoY to RM48.7 million from RM52.5 million.

This was mainly attributed to earlier phasing of marketing activations for the festive season and higher market ing expenses incurred for the launch of new products, higher input costs for raw materials such as skimmed milk powder, and increased warehouse and freight charges to support higher production/sales volume.

For the group’s F&B Thailand segment, revenue rose 15.2% (up 6.1% in baht terms) to RM525.85 million from RM456.52 million, driven by a successful customer loyalty programme and hawker installation initiatives nationwide, wider outlet coverage, the launch of new product variants and favourable foreign-exchange conditions.

Operating profit climbed 11.7% (2.9% in baht terms) to RM110.9 million from RM99.3 million, largely on higher Thailand domestic sales and favourable input costs from a stronger baht.

Going forward, the group expects the general consumer sentiment in Malaysia to remain weak.

“Riding on our successful new product offerings launched last year and those planned this year, we believe our beverages segment should do better. However, we expect competitive pressures in the dairies segment,” it said.

To expand its e-commerce presence, the group has launched its online shop, F&N Life. It also intends to reach out into overseas e-commerce channels.

As for Thailand, the group expects some headwinds for the domestic economy.

“However, we believe the strong foundation that we have laid in the past, coupled with investment in brand and new product launches will help drive our organic growth in F&B Thailand in the domestic market, Cambodia and Laos.

With the approval of the Board of Investment Thailand’s tax incentives for our new capital expenditure in Thailand, we are also expecting lower effective tax rate for our Thailand operations for this year,” it said.

It added that F&N’s newly established subsidiary in Dubai will help in increasing its presence in the Middle East and North Africa region.

Raw and packaging material prices are expected to remain volatile, while certain dairies input prices have risen since last year.

“Our policy to hedge a portion of our requirements ahead for the financial year will mitigate the impact, while we also actively and constantly implement cost-savings projects,” the group added.