KUALA LUMPUR (Jan 17): Fraser & Neave Holdings Bhd is expecting market conditions in its financial year ending Sept 30, 2022 (FY22) to remain tough due to the lingering effects of the Covid-19 pandemic, while commodity prices are anticipated to rise further.

Nevertheless, its chief executive officer Lim Yew Hoe said these do not distract the company from its strategic initiatives for a more sustainable future.

“Regardless of the short-term outlook, we remain confident in the long-term potential of our markets. The group has weathered many storms in our 139-year history, and key to our longevity has been the ability to embrace short-term impact for long-term sustainability,” he said in a statement released after the group's annual general meeting on Monday.

The group would prioritise improving and managing its costs in 2022, particularly its cost of goods sold, he said, which will include reviewing trade expenditure, strategic capital expenditure investment to extract efficiency, and smart procurement to obtain better value.

"The group will also leverage its strong manufacturing capability, diversify its range of products, and refine its product mix and pricing to maximise profitability.

"Riding on the encouraging return of economic activities, we will continue to build on adaptive channel strategies to capture opportunities in a fluid environment," Lim added.

It will also continue to build its fourth business model — halal packaged food. "A year after acquisition, the Sri Nona Companies made its maiden positive contribution for FY2021. The group foresees that the Sri Nona brand has much more potential to be realised, especially in meeting the rising demand for convenience and ready-to-eat food products," he said.

He also noted that the halal food business is growing at a double-digit rate, which is why the group is looking at expanding its product range and production capacity.

Meanwhile, the group said exports will remain a key focus of its food and beverage businesses in Malaysia and Thailand, as strong export growth contributed close to RM900 million or 21.7% of the group’s revenue in FY2021, fuelled by significant progress in Indochina, Greater China, the Middle East and Africa. "This boosted F&N’s positive revenue growth for FY2021, recording 3.6% year-on-year growth in a full pandemic year," the statement noted.

The group also shared that several capex projects will be operational in 2022, such as the new integrated warehouse building in Shah Alam that features the Automatic Storage & Retrieval System (ASRS); the 10MWp rooftop Solar Photovoltaic (PV) systems being installed at three plants in Malaysia (Shah Alam, Pulau Indah, Bentong) that will result in RM3-RM4 million savings in energy costs; and the Regional Distribution Centre in Rojana, Thailand that will enable the group to achieve better operational and cost efficiencies, and reduce its carbon footprint.

As for the flash flood-affected Shah Alam plant, Lim updated that it is being restarted cautiously, after submerged motors and parts were checked, repaired or changed.

He added that F&N is working with insurers on property damage and consequential loss comprising damaged finished goods, raw materials and packaging materials, and that the estimated financial impact of the flood-hit plant is about RM40 million. “As we have built up inventories to prepare for the upcoming festive (season), net impact on business has been mitigated to an extent,” he added.

During the AGM, the F&B group's shareholders approved the payment of a final single-tier dividend of 33 sen per share, to be paid on Feb 9, 2022. This will bring F&N’s total dividend payout for FY21 to 60 sen per share, same as FY20.

F&N shares settled 72 sen or 2.91% higher at RM25.50 on Monday (Jan 17), giving the group a market capitalisation of RM9.35 billion.