PETALING JAYA: Fraser & Neave Holdings Bhd’s (F&N) net profit for the third quarter ended June 30, 2019 rose 10% to RM114.94 million from RM104.5 million a year ago driven by higher profits from food and beverages business in Thailand (F&B Thailand).
In a filing with Bursa Malaysia, F&N said F&B Thailand reported a 72.7% jump in operating profit to RM99.1 million from RM57.4 million a year ago due to favourable input costs, lower advertising spending and withholding tax refund amounting to RM2.3 million received during the quarter.
The group said its food and beverages business in Malaysia (F&B Malaysia) recorded a 7.3% rise in operating profit to RM52.7 million from RM49.1 million, attributed to higher sales volume from beverages and dairy products, lower marketing spending and favourable input costs mainly for sugar, offset by higher freight costs and foreign exchange (forex) loss during the quarter.
Revenue for the quarter rose 10.86% to RM1.07 billion from RM961.89 million a year ago underpinned by higher contribution from both F&B Thailand and F&B Malaysia.
For the nine-month period ended June 30, 2019, F&N’s net profit increased 12.62% to RM342.23 million from RM303.89 million a year ago, while revenue was up 6.11% to RM3.10 billion from RM2.92 billion a year ago.
F&N expects the overall domestic market for F&B Malaysia to remain challenging due to intense competition, especially in the canned milk segment. For beverages, it has introduced an extensive portfolio of healthier options to mitigate the impact of the sugar tax.
“The prospects for F&B Thailand are better, following improvement in both sweetened condensed and evaporated milk segments. Management will continue to invest in brand building to strengthen our product portfolio and will increase significantly our advertising and promotions investment in the last quarter of this financial year,” it said.
For exports, F&N said slower off take from key customers and geopolitical tension in the Middle East have affected sales in certain markets while the strengthening of Thai baht has reduced its export competitiveness from Thailand.
The group expects raw and packaging material prices to remain volatile and has hedged most of its core commodity requirements and corresponding foreign currency exposure for the remaining quarter of the financial year.
For the next financial year, it is closely monitoring the dairies input prices that have increased and will take the necessary actions to mitigate any adverse impact.
Source: The Sun Daily