KUALA LUMPUR (Jan 24): Fraser & Neave Holdings Bhd (F&N) said the stronger ringgit is a boon for the food and beverage company given its position as a net importer.

This is especially so for its dairy products segment, as F&N obtains its raw materials from outside Malaysia as compared to the soft drinks segment, as there are local sugar suppliers in the country.

"The stronger ringgit is definitely good for the group and its overall business. For example, we import a lot of dairy products especially raw materials from several foreign countries, and transactions are predominantly done in US dollar," its chief financial officer Tan Hock Beng told reporters after a post-annual general meeting press conference today.

On a related matter, Tan said the group expects sugar prices to be lower in 2018 than last year, on expectations that international sugar prices would drop this year and that the ringgit will continue strengthening.

"It (sugar prices) should be lower going forward than last year, logically speaking. We look at international prices and add the local manufacturing cost factor into the equation… this is how we lock in our orders," Tan said.

"The first quarter (ended Dec 31, 2016 or 1QFY17) was a bit tough for us as it was the peak (in terms of raw material costs). But now, we can breathe a little," he added.

F&N had blamed the drop in its operating profit in 1QFY17 (down 26.1% year-on-year to RM60.4 million from RM81.6 million) as a result of higher raw material costs, particularly sugar. Apart from that, the decline was also due to organisational restructuring costs incurred and higher trade and consumer promotion spending.

At the noon break, F&N shares settled unchanged at RM28.48, valuing the group at RM10.44 billion.