Fraser and Neave posts fiscal year net profit slipped despite higher beverage volume

Fraser and Neave (F&N) 100Plus sports drinkFraser and Neave (F&N) 100Plus sports drink

Fraser and Neave reported Friday its fiscal year net profit fell 3.4 percent on-year to S$145.2 million as higher beverages and dairy volume was offset by higher raw materials and freight costs and unfavorable foreign currency effects.

Revenue for the12 months ended 30 September rose 2.5 percent on-year to S$1.88 billion, boosted by the food and beverage division, the beverage company said in a filing to SGX.

The foreign currency exchange loss for the year was S$5.02 million, compared with a year-earlier gain of S$939,000, F&N said.

“Given the challenges triggered by Covid-19 pandemic, F&N has achieved a satisfactory performance,” Koh Poh Tiong, chairman of the F&N board executive committee, favorable performance in Indonesia, and distribution of functional products, said in the statement.

The board recommended a final dividend of 3.5 Singapore cents a share, bringing the full-year dividend to 5.0 Singapore cents a share.

Beverages

Beverage revenue rose 3 percent on-year during the fiscal year to S$452.7 million, mainly on the sales volume ramp-up at Emerald Brewery, which is in its second year of operations, F&N said.

Strong beer volume boosted beverage revenue, but soft drinks revenue was impacted by lockdowns, F&N said.

Beverage profit before interest and tax (PBIT) increased 15.2 percent on-year in the fiscal year to S$20 million on improved sales volume and mix, lower marketing spend and reduced promotional expenses, offset by higher freight costs and foreign currency translation losses, F&N said.

Dairies

Dairies posted fiscal year revenue grew 2.3 percent on-year to S$1.19 billion, mainly on Dairies Malaysia and Dairies Thailand, on higher domestic canned milk sales and stronger export volumes.

However, PBIT for the dairies segment fell 9.6 percent on-year to S$238.1 million, on bulk milk shipment delays, higher freight costs and unfavorable input costs, F&N said, adding the Vietnam associate Vinamilk also had lower profit contribution due to higher input costs and unfavorable currency translation.

Printing & Publishing

The printing and publishing segment posted fiscal year revenue fell 3.3 percent on-year to S$222.4 million after stabilising its business performance.

The PBIT loss for the year narrowed to S$2.5 million from a loss of S$10.5 million the previous year, F&N said.

F&N said it has made structural changes to the operating cost base, which substantially reduced losses.

Outlook

F&N said the outlook was cautious as new waves of Covid-19 infections are expected to periodically impact its markets negatively, resulting in some business disruptions.

“The group remains cautious and continues to stay vigilant to mitigate the challenges posed by rising input costs, supply chain disruptions, spike in freight charges, adverse foreign currency movements and challenging market conditions posed by any resurgence of Covid-19. We will continue to exercise financial prudence,” F&N said.

In the food and beverage business, “the gradual reopening from the easing of movement restrictions is nevertheless a positive step towards normalization of our on-premise trade. Rising commodities prices and weakness in the regional currencies will add pressure on our margins which may have to be passed on to our customers in terms of higher prices and managed through productivity improvements,” F&N said.

Read more details of F&N’s results.