F&N's Q1 earnings fall 27% on stronger Singdollar

Fraser & Neave (F&N) posted a nearly 27 per cent drop in its first- quarter net profit due to a stronger Singdollar and the absence of contributions from its divested Myanmar brewery.

Earnings came in at $25.7 million, down from $35.2 million a year earlier, while revenue fell 11 per cent to $488.7 million due to lower contributions from its beverage and dairies business in Malaysia.

Last August, the beverage and publishing group completed the sale of its 55 per cent stake in Myanmar Brewery to Myanma Economic Holdings for US$560 million (S$801 million), realising a net divestment gain of $542 million. After the divestment, the operating results of the brewery were reclassified as discontinued operations for the first-quarter results, the group said.

Earnings per share was 1.8 cents, down from 2.4 cents a year ago after exceptional items, while net asset value per share stood at $1.74 as at Dec 31, up on the $1.57 as at Sept 30. No dividend was paid.

The Singdollar's strength against most Asian currencies may take a toll on the group's performance as a high proportion of its earnings comes from outside Singapore. But lower commodity prices will help mitigate the impact of foreign exchange losses, it said yesterday.

"Consumer sentiment in the food and beverage segment is expected to be affected by the economic climate and labour market," it added.

  • AT A GLANCE

  • REVENUE $488.7 million (-11.1 per cent)

    NET PROFIT $25.7 million (- 26.9 per cent)

    DIVIDEND None

It said consumer sentiment in Singapore appears subdued on increased worry over the economy in the near term, while consumer confidence in Malaysia and Thailand is being challenged by slower economic growth and higher unemployment.

Despite the higher volume from introducing limited-edition offerings for the festive period, beverage revenue was hit by translation losses from a weaker ringgit and competitive pricing due to an earlier start to the Chinese New Year sell-in and the loss of Red Bull energy drink sales.

The dairies business in Singapore and Malaysia was affected by a weaker ringgit and lower domestic and export sales. Sales were also hit by lower output capacity due to a production line overhaul and competitive pricing.

Branding and consumer trade campaigns and increased distribution helped boost revenue at Dairies Thailand, but that was offset by a weaker Thai baht.

The group's printing and publishing business dipped 5 per cent to $84.3 million from a year earlier. Gains in its publishing and distribution business were offset by lower print demand and a weaker ringgit taking a toll on its printing business.

F&N shares closed 3.9 per cent or eight cents down to $1.96 yesterday.

A version of this article appeared in the print edition of The Straits Times on February 04, 2016, with the headline 'F&N's Q1 earnings fall 27% on stronger Singdollar'. Print Edition | Subscribe