BEVERAGE maker F& N saw its net profit rise 13.7 per cent to S$45.1 million for the first quarter ended Dec 31 (before exceptional items), on the back of improved savings generated from cost-cutting measures.

 

Revenue for the quarter fizzled down 1.3 per cent to S$496.5 million, largely impacted by weak volumes in soft drinks as well as publishing and printing (P& P), it said in a business update on Thursday.

 

All of F& N' s core markets recorded sales decline, in particular in Malaysia. It said: " Subdued trade sentiments in Malaysia impeded recovery for its soft drinks segment, but was cushioned by strong canned milk sales to the Middle East and Africa."

 

Soft drink sales declined due to the impact of the earlier timing of Chinese New Year last year amid the pandemic, but beverage revenue was lifted by strong beer sales in Emerald Brewery.

 

Factors impacting its P& P segment include the cancellation or deferment of print orders, border closures and dampened consumer sentiments, F& N noted.

 

Meanwhile, revenue from F& N' s dairies segment was flat, it said. " While Dairies Malaysia recorded strong growth on higher export, Dairies Thailand' s revenue declined on unfavourable translation impact," F& N added. Thailand was hit by lower domestic volume as a result of the pandemic, as well as unfavourable currency translation effect.

 

Dairies Singapore revenue was affected by the pandemic, where general trade and food services' sales were impacted by reduced footfall and outlet closures.

 

Nevertheless, the mainboard-listed firm posted a 7 per cent increase in its profit before interest and tax (PBIT), as beverage earnings increased by over twofold. PBIT grew to S$81.5 million, up from S$76.3 million for the corresponding period a year ago.

 

This was driven by improved profitability in Emerald Brewery, and favourable packaging costs and lower advertising and promotions (A& P )in soft drinks, it said.

 

Thailand and Vietnam remained top profit contributors for the company. However, Malaysia' s contribution fell to 18 per cent, down from 20 per cent a year ago, as a result of lower sales and higher commodity prices. This was despite boosts from lower packaging costs, A& P spending and operating costs.

 

F& N' s earnings per share was 3.1 Singapore cents, versus 2.7 cents a year ago.

 

As at end-December, F& N had S$377.9 million in cash and S$836.6 million in bank borrowings, creating a gearing ratio of 13.6 per cent.

 

The group said it is building a new growth pillar through strengthening its halal position, which it hopes will complement F& N' s current product offering to consumers.

 

It acquired Sri Nona Group of Companies - Sri Nona Food Industries Sdn Bhd, Sri Nona Industries Sdn Bhd and Lee Shun Hing Sauce Industries Sdn Bhd - for a cash consideration of up to RM60 million (S$19.9 million). As of Jan 2021, it had a 55.5 per cent effective interest in Sri Nona.

 

" Combined distribution network and strong R& D capabilities enhance the group' s position in the halal food and beverage industry," it said.

 

Fraser and Neave, has reported earnings of $150.4 million for the year ended Sept 30, down 2% from the previous year. Revenue in the same period was down 4% y-o-y to $1.83 billion.

Earlier in the year, business was affected by lockdown in markets such as Malaysia and Singapore. However, overall numbers were offset by contributions from other businesses such as a new brewery in Myanmar, as well as other sales channels.

 

Chairman Koh Poh Tiong calls the year&rsquo s report card &ldquo relatively satisfactory&rdquo , given the pressures of on-going pandemic.

 

&ldquo While we have had a challenging third quarter, our businesses benefitted from the re-opening of regional economies in the fourth quarter,&rdquo he says.

&ldquo Although the green shoots to-date are encouraging, we are not yet out of the woods,&rdquo he warns.

 

&ldquo Barring a deterioration in the COVID-19 pandemic and any unforeseen circumstances, we hope that the nascent recovery will gain further traction in the near future,&rdquo adds Koh.

 

The company plans to push forward in its direct-to-consumer business and continue to expand in its core markets in Southeast Asia.

 

The company plans to pay a final dividend of 3.5 cents, which brings its full-year payout to five cents, down from 5.5 cents paid in the preceding year.

THE net profit of beverage maker F& N fell 8.2 per cent to S$118 million for the nine months ended June, as its top line took a hit from lower soft drink sales in Malaysia and printing-plant closures amid the Covid-19 pandemic.

 

The mainboard-listed firm&rsquo s revenue for 9M FY2020 dipped 2.9 per cent to S$1.38 billion, due to lower contributions from the beverage and publishing and printing (P& P) segments, which offset a revenue improvement in its dairies business.

 

9M revenue from the beverage segment fell 8 per cent to $339.1 million. Despite maiden contributions from the new brewery in Myanmar, the segment suffered from lower soft drink sales in Malaysia, given the flooding in East Malaysia and subdued demand amid the pandemic.

 

Nevertheless, the beverage segment still posted a 14.2 per cent increase in profit before interest and tax (PBIT) to S$14.6 million, lifted by the Myanmar brewery earnings.

 

F& N&rsquo s dairies segment remained resilient, with revenue inching up 2 per cent to S$879.3 million, on higher sales in Thailand, Singapore and Indonesia. A successful customer loyalty programme, hawker installation initiatives, wider outlet coverage and new products were the factors that drove growth in this segment.  

 

Even so, PBIT in the dairies segment shrank 2 per cent on the back of higher commodity and manufacturing costs and the effects of the Covid-19 pandemic in Malaysia. This was cushioned by a higher share of profit from Vinamilk, an associated company of F& N.

 

Meanwhile, revenue from the P& P segment fell 15 per cent to S$161.7 million, due to temporary plant closures, deferment of textbooks sales orders and a reduction in print requirement amid Covid-19. The segment posted a loss before interest and tax of S$19.4 million, reversing the S$200,000 PBIT from a year ago.

 

As at end-June, F& N had S$203.2 million in cash and S$842.3 million in bank borrowings, implying a gearing ratio of 18.9 per cent, up from 12.3 per cent a year ago.