Beverage maker Fraser and Neave reported on Tuesday that net profit for its fiscal third quarter fell 12.4 percent on-year to S$50.3 million amid a lower contribution from the dairies segment earnings, “challenging” beverage business conditions and higher interest costs.
Revenue for the quarter ended 30 June rose 0.4 percent on-year to S$484.97 million, driven by strong dairies sales and favorable translation effects, offset by weaker soft drinks sales, the company said in a filing to SGX on Tuesday after the market close.
The net finance cost rose 48.0 percent on-year to S$4.055 million, it said.
The dairies segment profit before interest and tax fell 8 percent on-year in the quarter to S$73.6 million, on the absence of dividend income from Vinamilk, Fraser and Neave said. Excluding the S$33.4 million dividend from Vinamilk in the year-earlier quarter, diaries earnings would have risen nearly 59 percent, it said.
“Dairies Malaysia’s growth was boosted by export sales and favorable currency movements, while Dairies Thailand’s growth in revenue was fueled by its growth in exports sales but partly offset by production downtime as a result of fire at a co-manufacturer’s plant. Dairies Singapore revenue grew on the back of tactical price initiatives and increased export sales to Indonesia,” Frasers and Neave said.
Beverages revenue fell 5 percent on-year in the quarter to S$133.8 million, it said.
“Business conditions for Beverages continued to be challenging especially in Malaysia where soft drinks sales were adversely impacted by slow off-take post-Hari Raya festive season and the postponement of purchases by customers in view of zero-rated GST which took effect 1 June 2018,” Fraser and Neave said.
“Export sales to Indonesia faced headwinds due to the depreciation of the Indonesian rupiah. The decrease was slightly uplifted by the increase in sales in Singapore as a result of the Hari Raya Puasa festivities,” it said in a separate statement.
But the segment’s profit before interest and tax rose 38.1 percent on-year to S$2.92 million on lower sugar costs, reduced operating costs and favorable translation effects, it said, adding the timing of advertising spending also contributed.
In the printing and publishing segment, revenue fell 7.2 percent on-year in the quarter to S$60.7 million amid a general decline in magazine print demand and the timing of order deliveries, while a decrease in the retail division’s revenue was on the cessation of airport stores, it said. The printing and publishing loss before tax increased by S$2.1 million on-year to S$4.7 million, it said.
For the nine months to 30 June, Fraser and Neave reported net profit rose 8.8 percent on-year to S$91.07 million, while revenue rose 1.1 percent on-year to S$1.445 billion.