PETALING JAYA: Fraser & Neave Holdings Bhd’s (F&N) net profit for the first quarter ended Dec 31, 2018 rose 15% to RM122.86 million from RM106.83 million a year ago due to higher contribution from its operations in Malaysia and Thailand.
In a filing with Bursa Malaysia, F&N said its food and beverages business in Malaysia (F&B Malaysia) registered a 27.5% growth in operating profit to RM52.5 million from RM41.2 million a year ago.
This was due to favourable input costs mainly for sugar, palm oil and dairy-based commodity but was partially offset by higher packaging material costs and higher manufacturing related costs.
Its food and beverage business in Thailand (F&B Thailand) registered a 36.5% growth in operating profit to RM99.3 million from RM72.7 million a year ago due to higher export revenue and favourable input costs for key raw materials.
However, this was partially offset by higher packaging material costs and higher advertising and promotional costs.
Revenue for the quarter rose marginally to RM1.01 billion from RM1 billion a year ago driven by F&B Thailand revenue, which rose 2.5% to RM456.5 million from RM445.5 million a year ago.
The higher revenue was driven by higher export revenue from market expansion and execution of promotional campaigns in the Indochina region. However, domestic revenue was flat due to intense competition in the sweetened beverage creamer market mitigated by higher evaporated milk revenue.
For F&B Malaysia, revenue declined marginally to RM553.4 million from RM556.1 million a year ago due to lower export revenue caused by the absence of a one-off contract packing business.
This was mitigated by higher domestic revenue with the earlier Chinese New Year festive sell-in for beverage products and lower discounts.
Moving forward, F&N expects the overall domestic market for both Malaysia and Thailand to remain challenging, with continuing competitive price pressures and intensifying competition.
In Malaysia, the group will assess and closely monitor the impact of the sugar tax on ready-to-drink beverages starting April 1, 2019 while also prioritising efforts to accelerate innovations and the development of healthier options.
Meanwhile, F&B Thailand has commenced paying corporate taxes starting this financial year following the full utilisation of the promotional privileges granted by the Board of Investment.
“The group will prioritise on initiatives to capture revenue synergies by focusing on its three growth drivers, namely innovation, excellence in execution and cost competitiveness to generate profitable and sustainable growth,” it said.
Source: The Sun Daily