KUALA LUMPUR (Aug 4): Fraser & Neave Holdings Bhd (F&N) posted an 18.35% drop in its third quarter net profit (3QFY20) to RM93.85 million from RM114.94 million last year on lower sales as the Covid-19 pandemic and Movement Control Order (MCO) seriously affected consumer demand.
F&N said in a filing today that revenue slipped 13.9% to RM918.07 million from RM1.07 billion in the corresponding quarter last year, mainly due to a 19.26% decline in its Malaysian operations’ revenue to RM461.44 million from RM571.51 million last year.
F&N Thailand experienced a smaller dip in revenue, falling 7.72% y-o-y to RM455.75 million from RM493.87 million.
F&N said operating profit for F&B Malaysia declined by 42.5% to RM30.32 million from lower volume, higher input costs and higher marketing expenditure for new product launches.
Meanwhile, operating profit for F&B Thailand fell 7.62% to RM91.57 million due to lower volume, higher input costs and a weakening Thai baht but was partially offset by lower advertising, marketing and operating expenses.
F&B Malaysia said it has seen gradual improvement in sales and stocks movement since the government eased MCO restrictions from early May.
“Hotel, restaurants and cafes (HORECA) channel, which has been more severely impacted, is slowly improving as they are now allowed to operate under Recovery MCO,” the food and beverage company said.
“Sales to general trade (GT) channel had started to stabilise since beginning of June 2020. Our export sales have also started to see gradual return of sales to certain markets.
“The MCO did not result in major disruption to our manufacturing operations as we implemented measures to safeguard the health of our workers,” F&N added.
For the nine months ended June 30, 2020, net profit dipped 5.2% to RM324.37 million from RM342.21 million a year ago, on the back of a 2.2% decline in revenue to RM3.03 billion from RM3.10 billion.
Earnings per share (EPS) for the quarter dipped to 25.6 sen from 31.3 sen, while EPS for the cumulative three quarters dropped to 88.5 sen from 93.5 sen.
On prospects, the group is mindful that the Covid-19 pandemic is far from over though it believes its strong business fundamentals will see it through the crisis.
“We will continue to be vigilant and have taken the necessary measures in our offices and factories to safeguard our staff wellbeing. We have also put in measures to ensure no significant disruption in our supply chain.
“Post June, we are seeing tentative signs of recovery in demand from Malaysia, Thailand and some of our export markets. As such, we are cautiously optimistic that sales in the fourth quarter will be better than third quarter as economic activities gradually normalise,” F&N said.
In the longer term, the company sees the pandemic as a chance for reset and a catalyst for change.
“We will need to be future-focused to ensure we can emerge stronger from this crisis. This will include process improvements and digitalisation.
“We will continue to invest in capex and in our brands to further strengthen our businesses. We can also leverage on our strong balance sheet, adequate stand-by bank facilities and low funding cost to support our operations and capitalise on opportunities that may arise.” the group added.
At the closing bell, F&N shares stood RM1.58 or 4.92% lower at RM30.52, making it the local bourse’ second top loser today.
The food and beverage manufacturer is valued at RM11.19 billion at this price, and saw around 94,000 of its shares traded today.
The counter has rebounded from a low this year of RM27.62 on March 16, but overall fell 12.4% year-to-date from RM34.84.