KUALA LUMPUR (Jan 31): Fraser & Neave Holdings Bhd (F&N) reported a 15% increase in its net profit to RM122.86 million for the first quarter ended Dec 31, 2018, from RM106.83 million in the same quarter a year ago, supported by higher contribution from its operations in Malaysia and Thailand.

Revenue for the quarter grew 0.8% to RM1.01 billion from RM1 billion a year earlier. Earnings per share grew to 33.5 sen per share from 29.2 sen per share.

In a stock exchange filing, the group said while F&N Malaysia's revenue fell 0.5% to RM553.4 million amid lower export revenue, operating profit improved 27.5% to RM52.5 million, helped by favourable input costs for sugar, palm oil and dairy-based commodity. This was partly offset by higher packaging material costs and manufacturing related costs.

Meanwhile, F&B Thailand's revenue grew 2.5% to RM456.5 million, driven by higher export revenue amid market expansion and execution of promotional campaigns in the Indochina region, despite domestic revenue being flat due to intense competition in the sweetened beverage creamer market. Operating profit for F&N Thailand grew 36.5% to RM99.3 million.

"The overall domestic market for both Malaysia and Thailand is expected to remain challenging with continuing competitive price pressures and intensifying competition," said the group about its prospects.

For Malaysia, F&N said it will assess and closely monitor the impact of the imposition of the excise duty of 40 sen per litre on ready-to-drink beverages that contain sugar exceeding 5 grams per 100ml starting April 1, 2019.

In the meantime, the group is prioritising efforts to accelerate innovations and the development of healthier options.

In Thailand, the group said it has commenced paying corporate taxes following the full utilisation of the promotional privileges granted by the Board of Investment.

"The group will prioritise on initiatives to capture revenue synergies by focusing on its three growth drivers, namely innovation, excellence in execution and cost competitiveness to generate profitable and sustainable growth.

"The board and management will continue to be vigilant and take decisive actions in managing the changes in external environment," it said.

F&N shares fell 10 sen or 0.29% to close at RM33.96, giving a market capitalisation of RM12.46 billion.