F&N Q2 profits down 9% despite rise in revenue

Net profit for the three months ended June 30 slid 9 per cent to S$40.5 million despite a 3.7 per cent rise in revenue to S$645.2 million.
Net profit for the three months ended June 30 slid 9 per cent to S$40.5 million despite a 3.7 per cent rise in revenue to S$645.2 million.PHOTO: BLOOMBERG

SINGAPORE - Fraser & Neave (F&N) has suffered a weaker bottomline in the third quarter on lower earnings from beverages, printing and publishing.

Net profit for the three months ended June 30 slid 9 per cent to S$40.5 million despite a 3.7 per cent rise in revenue to S$645.2 million.

Quarterly profits for beverages fell 16 per cent to S$19.6 million. Beverages contributed to 48.4 per cent of net profits this quarter.

Beer profits were hit by unfavourable exchange rates, higher tax, and higher operating costs for expanded operations, the company said.

Another hit to profits came from a S$895,000 loss in the printing and publishing business, which had contributed a net profit of S$3 million last year.

On the other hand, the topline grew. This was mainly because of relatively strong soft drink sales in Malaysia and robust dairy sales in Thailand.

Beverage revenue rose 11 per cent for the quarter on higher softdrink and beer sales. Soft drink revenue increased because of "effective" pre Hari-Raya promotion in Malaysia. This was also due to new product packaging, and new product launches.

Breweries sales rose because of higher selling prices and sales volumes.

Dairies revenue fell 0.56 per cent. Although revenue from Thailand was higher owing to promotional activities and "increased outlet penetration", this was offset by lower revenue from Malaysia and Singapore.

Dairies revenue from Malaysia was impacted by price competition and a weakening Ringgit. Revenue from Singapore was lower because of lower export sales and a domestic market slow-down.

Earnings per share for the quarter was 2.8 cents, down from 3.1 cents last year. Net asset value per ordinary share was S$1.16 at June 30, up from S$1.11 at Sept 30, last year.

Consumer sentiment in Singapore appears subdued due to slower economic growth, and market conditions in Malaysia and Thailand also remain challenging, the company noted.

It would also monitor the commodity price situation closely to mitigate the effect of rising costs, it said.

Finally, it noted that although the relatively strong Singapore may alleviate import and raw material costs, it would also impact the financial performance of the company, as a high proportion of earnings are derived from outside Singapore.

F&N shares closed at $2.30 on Wednesday, up four cents or 1.8 per cent.

jkoh@sph.com.sg