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F&N's net profit down 15.3% to $40.5m
Due to continued investment costs in new markets.
Fraser and Neave Limited recorded a revenue of $495m for the past quarter ending in December, up slightly by 0.2% from $493.8m.
This increase was mainly attributed to the contribution from the vending business which was acquired in July 2016, as well as revenue growth in Dairies Thailand and New Markets of Myanmar and Vietnam.
However, the revenue was slightly badgered by and 8% increase in operating expenses associated with the rise in distribution cost. Coupled with continued brand investment costs in new markets of Indonesia, Myanmar, Thailand and Vietnam, and negative foreign exchange effects, F&N’s net profit recorded a 15.3% downfall to $40.5m.
Dairies Thailand continued to be the group's best performing operation. Despite the flat volume and moderate revenue increase due to a slow-down in consumer spending, Dairies Thailand earnings jumped 16% mainly due to favourable input costs and weaker Singapore Dollar.
For beverages, top-line grew 5%, which was supported by the newly acquired vending business and growth in Beverages Singapore and New Markets, negative translation effects, rising input costs and continued marketing and administrative overheads to support brand building and distribution expansion activities affected earnings. However, beverages earnings fell 20% to $8.7m.
Here's more from the group:
Soft Drinks Malaysia 1Q2017 revenue fell 1 per cent (+1 per cent in constant currency) due to the weaker Ringgit, poor consumer sentiment and competitive pricing pressure. As a result of increasing raw material costs, in particular sugar, and higher trade and consumer promotion spending, Soft Drinks Malaysia 1Q2017 PBIT declined 27 per cent. On the other hand, the Group’s New Markets of Myanmar and Vietnam delivered strong top-line growth in 1Q2017. In particular, Myanmar experienced revenue growth as a result of distribution expansion and successful brand building initiatives, mainly for 100PLUS. Its canned milk, TEAPOT, which was formally introduced in Myanmar last year, also contributed to revenue growth, supported by the widening of distribution channels. Similarly, Vietnam achieved revenue growth in 1Q2017 due to effective festive-led promotions and success in growing distribution reach.
On 1 December 2016, the Group exercised a call option to acquire the remaining 30 per cent stake in Yoke Food Industries Sdn Bhd (“YFI”) for RM23.4 million (S$7.5 million). Together with the 70 per cent stake acquired in April 2014, this acquisition effectively increased the Group’s shareholding interest in YFI to 100 per cent. YFI carries on the business of manufacturing, marketing, distributing and exporting
of beverages, primarily in Indochina, Indonesia, Malaysia and Singapore. This acquisition complements the Group’s existing F&B business by offering an increased opportunity for the distribution and marketing of its brands in Southeast Asia, as well as establishes greater scale and a wider portfolio of brands.On 21 December 2016, the Group completed its acquisition of additional shares representing approximately 5.4 per cent interest in Vietnam Dairy Products Joint Stock Company (“Vinamilk”) through a competitive bid process, reaffirming its confidence in the management and business prospects of Vinamilk. In addition to a series of open market purchases in January 2017, to date, the Group has successfully raised its shareholding in Vinamilk to 17.5 per cent.
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