This article first appeared in The Edge Financial Daily on November 9, 2018

KUALA LUMPUR: Fraser & Neave Holdings Bhd’s (F&N) net profit soared over four times in the fourth quarter ended Sept 30, 2018 (4QFY18) to RM81.24 million from RM19.65 million in the previous year, thanks to increased contributions from both its Malaysian and Thai operations. The previous year was also impacted by restructuring costs and other one-off items.

This shot its earnings per share up to 22.2 sen versus 5.4 sen in 4QFY17. Revenue rose 2% year-on-year (y-o-y) to RM996.64 million from RM976.28 million. The group recommends a final single dividend of 30.5 sen per share, the same quantum it declared last year.

In a statement yesterday, the group said operating profit for F&N Malaysia soared 418.7% y-o-y to RM36.5 million on the back of higher revenue, operational cost savings and lower overheads, besides lower sugar prices, lower advertising and promotional spend because the previous year incurred restructuring expenses. Excluding the restructuring costs and other one-off items, however, operating profit grew by 78.4% y-o-y.

For F&N Thailand, operating profit jumped 94.9% y-o-y to RM61.7 million, thanks to higher revenue and favourable input costs.

For the full financial year, the group’s net profit rose 19% y-o-y to RM385.13 million from RM323.38 million — though revenue rose only marginally to RM4.11 billion from RM4.1 billion a year ago — mainly because of cost synergies and lower overheads in its Malaysian ops, favourable input cost, and higher export revenue. Not having to account for the one-off items mentioned earlier also helped.

Going into FY19, F&N chief executive officer Lim Yew Hoe said he expects the domestic markets in both Malaysia and Thailand to remain challenging amid intensifying competition.

There will also be the effects of volatile foreign currency movements and commodity prices to contend with. The group said it has partially hedged its core commodity requirements for FY19 with the corresponding foreign currency exposure wherever possible.

“In Malaysia, we will assess and closely monitor the impact of the imposition of excise duty at 40 sen per litre on ready-to-drink beverages that contain sugar exceeding 5g per 100 millilitres, starting April 1, 2019 as announced during the recent tabling of the Budget 2019, including taking appropriate actions as necessary,” Lim added.

As for Thailand, the group will begin to pay corporate taxes next year following the full utilisation of promotional incentives granted by the board of investment and carried forward losses from non-promoted businesses.

F&N shares slid 18 sen or 0.52% to settle at RM34.78 yesterday, with a market capitalisation of RM12.75 billion. The stock has jumped over 39% in the past 12 months.