KUALA LUMPUR (Nov 5): Food and beverage (F&B) company Fraser & Neave Holdings Bhd (F&N) will raise the prices of its products in stages due to high commodity costs.
F&N chief financial officer Lai Kah Shen said the company is keen that the group's customers could be affected by these tough economic times due to the Covid-19 pandemic.
"We would rather have more people consume our products [and] increase the frequency of consumption than maximise profit from each transaction. That is not our goal.
"We hope more people consume our products. That is why we try to increase them (product prices) gradually, so that consumers are not too affected. And this is really our last resort to adjust prices," Lai told the media at F&N's virtual results briefing on Friday (Nov 5).
F&N chief executive officer Lim Yew Hoe added: "We will see if we can absorb it (the impact of high commodity prices) and if not, we will increase product prices. We will look at our own efficiency and [see] how we can absorb it better. Those are two combinations that we will do in both Malaysia and Thailand. Other than that, we are also trying to reduce trade discounts.
"Today's commodity prices, like the price of palm oil, have gone up 100% in one year, [but] we cannot increase our product prices by 100% in one year. I think we will adjust the prices, so that the impact on consumers will be gradual and that is our promise," Lim said, adding that commodity costs account for more than RM150 million for the group.
For the financial year ended Sept 30, 2021 (FY21), F&N posted a lower net profit of RM395.16 million from RM410.38 million a year earlier on lower earnings due to higher commodity prices, reduced export margins, the company's restructuring and Covid-19-related expenses as well as a lower share of profit from an associate.
The group noted that the 3.7% decline in group profit for the year was partially mitigated by investment tax incentives for F&N Thailand and deferred tax assets recognised for F&N Malaysia.
Revenue, however, increased to RM4.13 billion for FY21 against RM3.99 billion previously, driven by the strong export performance of the group's F&B business in Malaysia and Thailand as well as nine months of contributions from its food business.
F&N remains cautious given the challenging market conditions and ongoing global uncertainties due to the Covid-19 pandemic. It foresees that the environment will remain challenging moving forward. Given that this is the new normal, the group does not expect the market to return to pre-pandemic conditions in the short term.
The group noted that it targets to achieve further operational and cost efficiencies, and carbon footprint reduction with the completion of several capital expenditure investment projects in 2022, such as the integrated warehouse in Shah Alam, drinking water line in Kota Kinabalu, regional distribution centre in Rojana, Thailand and installation of solar photovoltaic systems with a renewable energy capacity of 10MWp in Malaysia.
Throughout FY21, F&N distributed over two million products to various beneficiaries nationwide, including food banks and non-governmental organisations. In Thailand, F&N products were offered to 20,000 hawker community members at no cost as an encouragement.
At Friday’s noon break, shares in F&N were down by 0.67% or 18 sen at RM26.82, translating into a market capitalisation of RM9.84 billion. The counter saw some 31,000 shares transacted.