F&N 3Q net profit up 10% on better results from Thai, Malaysian ops

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KUALA LUMPUR (Aug 6): Fraser and Neave Holdings Bhd (F&N)'s third quarter net profit rose 10% to RM114.94 million, from RM104.5 million a year earlier, on the back of better performance from its Thai operations and marginally better results from its Malaysian operations.

Earnings per share for the quarter ended June 30, 2019 rose to 31.3 sen, from 28.5 sen previously, the group said in a filing with Bursa Malaysia.

Quarterly revenue increased 10.9% to RM1.07 billion from RM961.89 million, thanks to higher contributions from its food and beverage (F&B) segment in both Thailand and Malaysia.

F&N said its Malaysian operations saw revenue growth due to its commercial campaigns during the Hari Raya and Harvest Festival festive periods and growth in canned milk revenue. However, this was mitigated by lower export revenue.

The higher earnings from the Malaysian operations was attributed to higher sales volume for both its beverages and dairy products, lower marketing spending, favourable input cost, particularly sugar. However, higher freight costs and foreign exchange (forex) losses mitigated such gains.

Meanwhile, the Thai operations saw higher revenue due to loyalty programmes and campaigns in both Thailand and the wider Indochina region, and higher export revenue. These gains, the group said, were helped by a favourable exchange rate between the ringgit and the baht.

F&N said its cumulative net profit for the nine months ended June 30, 2019 rose 12.6% to RM342.23 million, from RM303.89 million in the previous corresponding period, with revenue up 6.1% at RM3.1 billion from RM2.92 billion.

On its prospects, the group said its Malaysian operations are set to remain challenging given intense competition in the market, especially for its canned milk segments. In addition, the group added that it had introduced more products that are deemed to be healthier to mitigate the impact of the excise duty on sugar-sweetened beverages on July 1.

Meanwhile, its Thai operations are seen to be more positive, following improvements in both the sweetened condensed and evaporated milk segments.

"The group will continue to prioritise on strengthening its commercial strategies, route-to-market execution, accelerating innovations and improving operational efficiencies across the businesses to generate profitable and sustainable growth" said F&N.

F&N's share price closed unchanged at RM33.90 today, with a market capitalisation of RM12.43 billion.