F&N’s 4Q profit jumps more than fourfold, declares 30.5 sen dividend

F&N’s 4Q profit jumps more than fourfold, declares 30.5 sen dividend
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KUALA LUMPUR (Nov 8): Fraser & Neave Holdings Bhd’s net profit soared over four times in the fourth quarter ended Sept 30, 2018 (4QFY18) to RM81.24 million compared with RM19.65 million in the previous year, thanks to increased contribution from both its Malaysian and Thailand operations. The previous year was also impacted by restructuring costs and other one-off items.

This shot its earnings per share up to 22.2 sen versus 5.4 sen in 4QFY17. Revenue rose 2% to RM996.64 million from RM976.28 million a year ago. The group recommends a final single dividend of 30.5 sen per share, the same as it declared a year ago.

In a statement today, the group said operating profit for F&N Malaysia soared 418.7% year-on-year to RM36.5 million during the quarter on the back of higher revenue, operational cost savings and lower overheads, lower sugar prices which was partly offset by higher packaging material costs, lower advertising and promotions (A&P) spend and restructuring expenses incurred last year. Excluding restructuring costs and other one-off items however, operating profit grew by 78.4% y-o-y.

In F&N Thailand, operating profit jumped 94.9% y-o-y to RM61.7 million, thanks to higher revenue and favourable input costs.

For the full year, the group's net profit rose 19% to RM385.13 million from RM323.38 million in FY17, though revenue rose only marginally to RM4.11 billion from RM4.1 billion a year ago.

"Cost synergies and lower overheads in its Malaysia operations, favourable input cost, higher export revenue and lower restructuring costs and other one-off items incurred compared to the year before contributed to the double-digit profit growth in FY18," F&N said.

Commenting on FY19's prospects, F&N chief executive officer Lim Yew Hoe said he expects the domestic markets in both Malaysia and Thailand to remain challenging amid continuing competitive price pressures and intensifying competition. There will also be the effects of volatile foreign currency movements and commodity prices to contend with.

The group said it has partially hedged its core commodity requirements for the coming financial year with the corresponding foreign currency exposure wherever possible.

“In Malaysia, we will assess and closely monitor the impact of the imposition of excise duty at 40 cents per litre on ready-to-drink beverages that contain sugar exceeding 5 grams per 100 millilitres, starting 1 April 2019 as announced during the recent tabling of the Budget 2019, including taking appropriate actions as necessary," Lim added.

As for Thailand, the group will begin to pay corporate taxes next year following the full utilisation of promotional incentives granted by the board of investment and carried forward losses from non-promoted businesses.

Lim added that innovation and reinvention will be the group’s overarching strategy to stimulate growth and demand, while it strives to meet consumer’s increasing demand for more affordable, tastier and healthier offerings.

F&N shares slid 18 sen or 0.52% to settle at RM34.78 today, for a market capitalisation of RM12.75 billion. The stock has jumped over 39% in the past 12 months.