F&N's full-year earnings surge after sale of brewery stake

F&N says that consumer sentiment for the food and beverage segment in Singapore "appears to be subdued due to slow economic growth".
F&N says that consumer sentiment for the food and beverage segment in Singapore "appears to be subdued due to slow economic growth".PHOTO: BLOOMBERG

A gain from a disposal in August sent full-year earnings rocketing to $633 million at food and beverage giant Fraser & Neave (F&N).

The earnings surge for the 12 months to Sept 30 came on the back of a net gain of $542 million after the sale of its 55 per cent stake in Myanmar Brewery to Myanma Economic Holdings for US$560 million (S$796 million) in August.

F&N said in a statement yesterday that proceeds from the sale will be used to strengthen its competitiveness and to "achieve its full business potential in core markets of Malaysia, Singapore and Thailand".

It will also deploy funds to explore opportunities in new markets such as Myanmar, Vietnam and Indonesia.

Revenue for the year edged up 0.5 per cent to $2.1 billion, thanks to improved contributions from its core dairies markets, especially Thailand. The dairies division turned in a slightly higher top line of $1.1 billion, due to higher canned milk volumes across key brands and lower input costs despite a weaker ringgit.

Turnover from the beverages division was flat at $639 million while the printing and publishing division's sales slid to $341 million, dragged down by lower print orders amid depressed selling prices.

Earnings per share came in at 43.6 cents. Net asset value per share stood at $1.57 as at Sept 30, up from $1.11 at the same time a year ago.

The group declared a final dividend of three cents per share, to be paid on Feb 19.

Together with the interim dividend of two cents, this brings the total dividend for the year to five cents, unchanged from last year.

F&N noted that consumer sentiment for the food and beverage segment in Singapore "appears to be subdued due to slow economic growth" while business conditions in Malaysia and Thailand "remain challenging".

"In the short- to mid-term, beverage profitability may be negatively impacted as the group steps up its investments in developing new products and new markets."

However, the group added that it expects its printing and publishing business to turn a profit next year after major restructuring this year "to match the shift in print market conditions".

It expects the Singapore dollar to remain strong against the Malaysian ringgit, the Thai baht and the Vietnam dong, which could have a "negative impact" on the group's profits denominated in those currencies.

The results were released after markets closed.

F&N shares closed three cents or 1.4 per cent up at $2.17 yesterday, before the results were released.

Jacqueline Woo

A version of this article appeared in the print edition of The Straits Times on November 07, 2015, with the headline 'F&N's full-year earnings surge after sale of brewery stake'. Print Edition | Subscribe