F&N’s 2Q earnings dip on weaker demand


WEAKER consumer demand contracted Fraser & Neave Holdings Bhd’s (F&N) earnings in the second quarter ended March 31, 2020 (2QFY20), to RM102.17 million, a 2.16% fall year-on-year (YoY) from RM104.43 million a year ago.

F&N’s earnings per share in the quarter is 27.9 sen.

Revenue for the quarter decreased marginally to RM1.01 billion from RM1.03 billion made in the corresponding quarter last year, due to adverse impact from the Covid-19 outbreak and the containment measures implemented.

The group’s Malaysian business recorded a 7.8% decline in revenue to RM499.2 million during the three months due to an earlier sell-in for the Chinese New Year (CNY) and the Movement Control Order (MCO), which commenced from March 18, 2020.

The decrease was partially offset by higher export revenue, especially in the Asean and Greater China regions.

Despite recording growth in exports compared to last year, the quantum increase was limited due to postponement of orders as a result of lockdown and quarantine imposed on shipping vessels in certain countries due to the Covid-19 pandemic, the fast-moving consumer goods maker stated in its exchange filing yesterday.

For the cumulative six months (1HFY20), F&N’s earnings increased slightly to RM230.54 million from RM227.29 in the same period last year.

Cumulative revenue increased 3.92% YoY to RM2.12 billion from RM2.04 billion in 1HFY19.

F&N CEO Lim Yew Hoe attributed the group’s sustained growth to a strong quarter performance, combined with balanced geographical footprint and a relentless focus on innovation and cost efficiency and efforts.

“We have adjusted and sharpened our route-to-market and channel strategies in view of the MCO and changes in consumer- buying behaviour.

“We will continue to work closely with our trade partners to ensure minimal disruption during this period when cashflow is likely to be tight and explore opportunities to sustain mutual growth,” he said in a statement yesterday.

F&N chairman Tengku Syed Badarudin Jamalullail said the group foresees weak consumer demand to continue into 2HFY20, especially for beverage sales as consumers adjust to a new normal of reduced social activities.

“While there are many uncertainties as the crisis is still unfolding, we remain positive given our strong fundamentals, our robust balance sheet and strong portfolio of brands.

“We will continue to execute cost optimisation initiatives to deliver efficiencies and savings and reinvest in our brands,” he added.

Tengku Syed Badarudin stated that F&N has hedged a portion of its raw materials requirements ahead for the financial year to mitigate the impact of the rise in certain dairies input prices.

F&N has declared an interim single-tier dividend of 27 sen to be paid on June 12, 2020.

The stock closed 36 sen or 1.13% higher at RM32.10 yesterday, valuing the group at RM11.8 billion.