by NUR HAZIQAH A MALEK / pic by TMR FILE
FRASER and Neave Holdings Bhd (F&N) posted a year-on-year (YoY) increase of 2.46% for its net profit in the third quarter ended June 30, 2021 (3Q21) of RM95.16 million against RM93.85 million recorded a year ago.
Revenue for the quarter under review grew 15.4% to RM1.06 billion, versus RM918.07 recorded in the previous year, corresponding quarter driven by maiden contribution from its food business (Sri Nona).
In a filing to Bursa Malaysia yesterday, the company noted food and beverage (F&B) Malaysia revenue improvement attributed to ramp up in sales in the run up to Aidilfitri and Harvest festive season and Ramadhan Bazaars in operation, compared to a more muted Aidilfitri festive season with cancellation of bazaars last year.
The Aidilfitri festive season sales trended better than last year for both beverages and dairies.
However, positive sales momentum was disrupted in the month of June amid lockdown.
“Export business recorded high double-digit revenue growth in 3Q attributed to spill-over of fulfilment of orders from 2Q due to earlier capacity constraints and improvement over last year, where export sales were gradually recovering in certain markets. Food business (Sri Nona) also contributed to the growth for the Aidilfitri season from the sale of rice cakes (ketupat) and other products with an increase of in-home consumption,” F&N noted.
Despite the improvement, operating profit for the quarter decreased by 43.4% to RM17.1 million due to unfavourable input costs, higher freight costs for export business, restructuring costs and absence of one-off advertising and promotion support fund received from brand owner last year and Covid-19 related unplanned operating expenses.
Meanwhile, its F&B business in Thailand pulled an encouraging performance of 13.6% revenue growth for the quarter to RM517.9 million against the previous RM455.8 million, partially offset by unfavourable Thai baht/ringgit translation.
“Domestic market recorded double-digit revenue growth from continued efforts to drive off-take in-store for modern trade and in traditional trade via premiums, promotions and loyalty programmes.
“Exports to Cambodia and Laos also grew by double-digit through promotion campaigns to drive offtake in the trade and in provinces, despite lock down in both countries,” it noted.
It added that operating profit increased 7.8% while it was 12.9% in Thai baht terms to RM98.7 million versus the previous RM91.6 million mainly due to higher sales, phasing of advertising and promotions, as well as partially offset by higher input costs and royalty expenses.
For the year-to-date (YTD) performance, the group recorded a higher net profit of RM336.47 million against the previous RM324.39 million, while its revenue also marginally increased to RM3.23 billion versus RM3.03 billion.
The group noted that its performance has been relatively resilient for the financial YTD, but plans to remain cautious in its outlook given the challenging market conditions.
“With the escalation in Covid-19 cases in our key markets in Thailand and Malaysia, we expect consumer sentiment to remain weak amid growing unemployment and lesser disposable income.
“Sales to the out-of-home channels will likely be further impacted and any further uptrend for key commodities cost will put pressure on our efforts to manage profit margins,” it said.
It added that it is also leveraging technology and digitalisation to improve processes and operations.
“We will continue to refine our product discounts and pricing to strengthen our businesses.
“At the same time, we will focus on purposeful innovations in the health and wellness category,” it said.
In addition, the group’s recently established Halal food pillar will provide it with a platform to expand into more halal food segments and innovative products offerings.
“We are leveraging partnerships within our group to expand route-to-market coverage and supply chain synergies and in the near term, to expand capacity for the operations,” it said.