This article first appeared in The Edge Financial Daily on April 30, 2019

KUALA LUMPUR: Fraser & Neave Holdings Bhd’s (F&N) second-quarter net profit rose 12.8% year-on-year (y-o-y), driven by the strong performance of its food and beverages (F&B) operations in Thailand whose operating profit rose 55.6% y-o-y underpinned by higher sales, favourable input costs and one-off income amounting to RM3.7 million during the quarter.

The group’s net profit rose to RM104.43 million in the quarter ended March 31, 2019 (2QFY19) from RM92.57 million a year ago

This was also contributed by higher sales volume from F&B Malaysia, which saw a 6.5% y-o-y increase during the quarter.

This resulted in higher earnings per share of 28.5 sen for 2QFY19 compared with 25.3 sen for 2QFY18. F&N’s quarterly revenue grew 6.9% to RM1.03 billion from RM959.58 million in 2QFY18.

The group declared an interim dividend of 27 sen per share amounting to RM99 million for the financial year ending Sept 30, 2019 (FY19), payable on June 13.

For the cumulative six months (1HFY19), the group’s net profit jumped 14% to RM227.29 million from RM199.4 million a year ago, while revenue increased 3.8% to RM2.04 billion from RM1.96 billion in 1HFY18.

In a statement yesterday, F&N said it is on track to meet its RM800 million sales target in 2020 through continued efforts to widen the distribution channels in the Middle East, Northern Africa and Asean countries and expanding product application.

On prospects, F&N chairman Tengku Syed Badarudin Jamalullail said the overall domestic market for Malaysia is expected to remain challenging given the intensifying competition, especially in the canned milk segment.

“The prospects for Thailand are expected to be better, following the improvement in the sweetened and unsweetened condensed milk segments. The group will increase investment in brand building to strengthen our product portfolio in 2HFY19,” he added.

Its chief executive officer Lim Yew Hoe said the postponement of the imposition of excise duty on sugar sweetened beverages to July 1, instead of the initial proposed date of April 1, will help F&N better manage the impact on the affected product categories for FY19 and to offer more extensive portfolio of healthier options.

He added that the group will prioritise on strengthening its commercial strategies, route-to-market execution, accelerating innovations and improving operational efficiencies across the business to generate profitable and sustainable growth.