F&N posts RM103.5m net income for 2Q21

by PRIYA VASU / pic by TMR FILE

FRASER & Neave Holdings Bhd posted net profit of RM103.51 million for the second quarter ended March 31, 2021 (2QFY21), while revenue improved to RM1.09 billion driven by steady domestic sales and higher exports.

In a filing to Bursa Malaysia yesterday, the company said higher sales, favourable product mix, prudent control on activation and promotion spends, and the maiden contribution from Sri Nona companies mitigated pressures from rising commodity prices and lower exports margin from higher freight costs.

“Despite subdued Chinese New Year festivities due to Movement Control Order 2.0 restrictions, there was positive momentum in on-premise demand after the easing of restrictions in early March,” the company noted in the filing yesterday.

The recovery in the domestic market, double-digit growth in exports fuelled by growth in Middle East and Africa markets, and contribution from Sri Nona companies spurred the growth in food and beverages (F&B) Malaysia 2QFY21 revenue by 13% to RM564.2 million.

Operating profit rose 8.4% to RM26.4 million during the same period despite higher Covid-19 related expenses incurred in the quarter to conduct proactive safety measures. F&B Thailand registered 4.3% revenue growth (+3.8% in Thai baht terms) in 2QFY21 at RM525.8 million amid recovery in domestic economic activities especially in the hawkers, restaurant/café operators, and cash and carry channels.

It added that exports from Thailand also grew from greater demand overseas, which helped mitigate the slower offtake in Indochina markets due to stronger Thai baht (which led to higher price in trade) and escalating Covid-19 cases in the region. F&B Thailand’s operating profit for the 2QFY21 increased 6.2% to RM112.1 million (+5.7% in Thai baht terms).

Supported by the progressive recovery of domestic sales, resilient exports volume and contribution from Sri Nona companies, group revenue increased by 2.8% to RM2.17 billion for the first half of the year ended March 31, 2021 (1H21), while group profit before tax increased to RM298.3 million.

Group profit after tax for the period grew by 4.2% due to investment tax incentives at the Thai subsidiary, offset by lower share of profit from an associate.

Higher beverage sales and double-digit growth in exports in 2Q, as well as sustained demand for dairy products, and contribution from Sri Nona companies led to 4.4% revenue growth for F&B Malaysia at RM1.13 billion in 1H21. However, operating profit declined slightly to RM71.3 million from RM73 million last year due to lower export margins from the increase in commodity costs and international freight charges.

“Against a challenging backdrop, we built on our adaptive route-to-market execution and channel strategies to reach out to consumers and meet their expectations. We are also fortunate to have strong brands such as 100PLUS which are the must-haves during the festivities,” said F&N CEO Lim Yew Hoe.

He added that going forward the group will remain cautious of the local and global uncertainties as the Covid-19 pandemic situation is yet to stabilise.

“Commodity prices are on the uptrend and expected to rise further. Regardless of the situation, we will continue to develop our rich portfolio of brands and expand our geographical presence, while adapting and refining our strategies to constraints imposed by the pandemic,” said Lim.

In line with the group’s performance, the board declared an interim single-tier dividend of 27 sen per share (2020: 27 sen) for the financial year ending Sept 30, 2021. This dividend amounting to approximately RM99 million will be paid on June 16, 2021.