F&N net profit slips 9% in Q3 despite rise in revenue (The Straits Times)

Fraser & Neave (F&N) has recorded a weaker bottom line in the third quarter on lower earnings from beverages, printing and publishing.

Net profit for the three months ended June 30 slid 9 per cent to $40.5 million despite a 3.7 per cent rise in revenue to $645.2 million.

Quarterly profits for beverages fell 16 per cent to $19.6 million. Beverages contributed to 48.4 per cent of net profits this quarter.

Beer profits were hit by unfavourable exchange rates, higher tax, and higher operating costs for expanded operations, the company said.

Another hit to profits came from a $895,000 loss in the printing and publishing business, which had contributed a net profit of $3 million last year.

But the topline grew, mainly because of relatively strong soft drink sales in Malaysia and robust dairy sales in Thailand.

Beverage revenue rose 11 per cent for the quarter on higher soft drink and beer sales. Soft drink revenue increased because of “effective” pre-Hari Raya promotions in Malaysia. This was also because of new product packaging, and new product launches.

Breweries sales rose, due to higher selling prices and sales volumes.

Dairies revenue fell 0.56 per cent. Although revenue from Thailand was higher, owing to promotional activities and “increased outlet penetration”, this was offset by lower revenue from Malaysia and Singapore.

Dairies revenue from Malaysia was hurt by price competition and a weakening ringgit. Revenue from Singapore was lower because of lower export sales and a domestic market slowdown.

Earnings per share for the quarter was 2.8 cents, down from 3.1 cents last year. Net asset value per ordinary share was $1.16 as at June 30, up from $1.11 as at Sept 30 last year.

Consumer sentiment in Singapore appears subdued due to slower economic growth, and market conditions in Malaysia and Thailand also remain challenging, the company noted.

It would also monitor commodity prices closely to mitigate the effect of rising costs, it said.

Finally, it noted that although the relatively strong Singapore dollar may alleviate import and raw material costs, it would also impact the financial performance of the company, as a high proportion of earnings are derived from outside Singapore.

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