Full-year net profit at F&N plunges 83%

F&N product 100PLUS. Revenue from the beverage segment fell 10 per cent from a year earlier to $604.4 million, dragging profit before interest and taxes down 40 per cent to $23 million.
F&N product 100PLUS. Revenue from the beverage segment fell 10 per cent from a year earlier to $604.4 million, dragging profit before interest and taxes down 40 per cent to $23 million.PHOTO: F&N

Lacklustre performance in Malaysia plus absence of one-off gain take the fizz out of company's showing

The absence of a one-off gain and a weaker performance in Malaysia put a dent in the numbers at Fraser and Neave (F&N) for the full year.

Net profit dived 82.9 per cent to $108.1 million for the 12 months to Sept 30, mainly because the firm enjoyed a sizeable boost last year after it sold Myanmar Brewery.

If that gain is excluded, earnings this year would have been 72.9 per cent higher at $109 million, thanks largely to increased takings from the dairy business and reduced losses from printing and publishing.

Full-year revenue fell 6.7 per cent from a year earlier to $1.98 billion on lower contributions from the Malaysian beverage and dairy business as well as the printing and publishing division.

Despite a 3.7 per cent dip in dairy revenue to $1.12 billion, the segment's profit before interest and taxes jumped 72.5 per cent to $118.7 million due to lower milk-based commodity costs and improved operational efficiencies.

  • AT A GLANCE

  • REVENUE: $1.98 billion (-6.7%)

    NET PROFIT: $108.1 million (-82.9%)

    FINAL DIVIDEND: 3 cents a share (unchanged)

And while revenue from printing and publishing fell 9.8 per cent from a year ago to $307.7 million, losses before interest and taxes narrowed from $15.3 million last year to $5.2 million this year.

This was mainly the result of a restructuring exercise last year that reduced the print business' operating cost base and current year's depreciation charges.

Revenue from the beverage segment fell 10 per cent from a year earlier to $604.4 million, dragging profit before interest and taxes down 40 per cent to $23 million.

The lower profit was also a result of mounting pricing pressures, loss of contribution from Red Bull, a weaker Malaysian ringgit and costs associated with new product launches and regional expansion.

Earnings per share for the full year was 7.5 cents, up from 4.4 cents in the same period a year ago while net asset value per share was $1.97 as at Sept 30, up from $1.57 a year ago.

The group has recommended a final dividend of three cents, unchanged from a year ago, to be paid on Feb 16.

Mr Koh Poh Tiong, chairman of the board executive committee, said: "Our food and beverage division recorded volume gains and double-digit earnings growth in our core markets, on the back of effective consumer and trade programmes and strengthened route- to-market, and despite negative translation effects of the weakening Malaysian ringgit and Thai baht."

He also flagged risks, including the weaker economy and financial market volatility, that could weigh on consumer confidence and demand, as well as intensifying competition and rising raw material costs.

Earnings were posted after market close. The counter rose one cent or 0.47 per cent to $2.12 yesterday.

A version of this article appeared in the print edition of The Straits Times on November 08, 2016, with the headline 'Full-year net profit at F&N plunges 83%'. Print Edition | Subscribe