Soft drink maker Fraser and Neave reports fiscal 1Q net profit rose nearly 48 percent

Singapore two-dollar billsSingapore two-dollar bills

Fraser and Neave reported on Monday that its fiscal first quarter net profit rose 47.5 percent on-year to S$37.95 million amid higher contributions from the dairies operations.

Revenue for the quarter ended 31 December edged up 0.4 percent on-year to S$464.42 million, it said in a filing to SGX after the market close on Monday.

Trading profit increased 43.3 percent on-year in the quarter to S$48.00 million, Fraser and Neave said.

Revenue from the dairies segment was flat at S$281.0 million, but profit before interest and tax (PBIT) climbed 43.4 percent on-year to S$72.0 million on higher contributions from its associated company in Vietnam, Vinamilk, and stronger performances from Dairies Malaysia and Dairies Thailand,mainly on lower input costs for milk-based commodities, sugar and palm oil, which offset higher advertising and promotion costs, it said.

In the beverages segment, revenue increased 7.6 percent on-year in the quarter, but it swung to a loss before interest and tax of S$200,000, from a PBIT of S$1.6 million in the year-ago quarter, Fraser and Neave said.

“Growth in Soft DrinksMalaysia and Soft Drinks Singapore were mainly contributed by 100PLUS and F&N CSD on the back of strong activations and promotions as a result of early sell-in for 2019 Chinese New Year festivities,” the filing said.

But it added, “PBIT was impacted by pre-operating costs incurred for the greenfield brewery in Myanmar and higher overall increase in materials and manufacturing costs for Soft Drinks.”

Fraser and Neave was cautious on the outlook, pointing to “challenging” consumer sentiment for the food and beverage sector amid continuing competition and volatility in foreign currencies and commodity prices.

It added that it was waiting for more details on Malaysia’s implementation of a 40 sen per liter excise duty on ready-to-drink beverages with more than 5 grams of sugar per 100 milliliters, which was due to start on 1 April.

Get the Shenton Wire morning briefing in your inbox