By TMR

FRASER & Neave Holdings Bhd (F&N) gave a cautious outlook for 2021 despite delivering a 6.6% rise in its first-quarter (1Q) net profit as uncertainty around the Covid-19 pandemic continues to push commodity and transportation costs higher.

The group noted in a recent filing to Bursa Malaysia that skimmed milk prices have increased since last year and remained high on stronger demand for dairy, especially from China.

“Other commodity prices have also been generally on the uptrend. Some of our export markets have also been affected by higher freight charges due to shortage of shipping containers,” F&N stated.

Amid the challenges, the group is looking to strengthen and scale up its e-commerce operations, sharpen its route-to-market and channel strategies to fulfil consumers’ needs and expectations. F&N’s acquisition of Sri Nona Co will also enable the group to establish halal food as its new pillar of growth.

“For exports, we remain focused on growing our sales in existing markets and expanding to new markets while adapting and refining our strategies to constraints imposed by the pandemic,” it stated.

F&N’s net profit for its 1Q ended Dec 31, 2020, was up by 6.6% year-on-year (YoY) to RM136.81 million from RM128.37 million the previous year due to tax incentives enjoyed by its subsidiary in Thailand.

Its turnover for the quarter was 2.5% lower YoY at RM1.08 billion against a higher base of RM1.11 billion registered a year ago. The group noted that contributions from diversified product and geographical presence helped mitigate slower domestic markets in Malaysia and Thailand.

Revenue from its Malaysia operations declined by 2.9% YoY to RM568.2 million during the quarter amid cautious trade sentiments in the domestic market as Covid-19 cases continued to rise.

Export revenue maintained, boosted by double-digit growth in the Middle East and Africa markets although growth was limited due to container shortages worldwide and spike in international freight charges.