Update F&N 2Q profit jumps 25.4% yoy to RM68.1m, dividend 22 sen per share

by **Cals** Wed 07 May 2014, 22:50

Update F&N 2Q profit jumps 25.4% yoy to RM68.1m, dividend 22 sen per share

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 07 May 2014 17:59

KUALA LUMPUR (May 7): Fraser & Neave Holdings Bhd’s (F&N) net profit jumped 25.4% year-on-year (y-o-y) to RM68.1 million in the second quarter ended Mar 31, 2014, from RM54.3 million.

Revenue rose 8.1% y-o-y to RM935.4 million, from RM865.3 million.

F&N said it is recommending an interim single tier dividend of 22 sen per share amounting to RM80.4 million.

In a statement to Bursa Malaysia, the manufacturer of soft drinks, dairies and non-carbonated beverages said its group operating profit improved by 22.3%, contributed by its soft drinks and dairies divisions in Malaysia.

However, F&N said its Dairies Thailand’s operating profit declined by 8.0%, despite higher sales achievement, as it was impacted by high commodity prices that was not able to be passed on.

The firm said the larger revenue was driven by stronger sales from both its dairies operations, but soft drinks’ sales were impacted by heavy competitors’ trade discounting.

It added both Dairies Malaysia and Thailand registered double digit growth of 13.0% and 18.4% respectively, driven by stronger domestic market off-take.

For the half-year period, net profit registered RM136.9 million versus RM111.1 million in the previous corresponding period, while revenue stood at RM1.88 billion from RM1.72 billion a year ago.

F&N said its higher group operating profit was mainly attributable to improved performances by its Soft Drinks and Dairies Malaysia divisions.

Despite higher sales for Dairies Thailand, the firm said the inability to pass on commodity price increase to end consumers has negated the contribution of higher revenue to operating profit.

F&N said the larger revenue was mainly contributed by the improved performances of all its business units, in particular, from both its dairies operations.

The firm said Dairies Malaysia’s and Dairies Thailand’s improved performances were driven by stronger domestic market off-take.

On prospects for the rest of the year, F&N CEO Somsak Chayapong said: “The remainder of the current financial year continues to be challenging due to pressure on consumer sentiment.”

“This is added with growing concerns on the high level of household debts and the government's decision to reduce subsidies on certain essential consumer goods in Malaysia.”

Somsak added that cost of doing business is expected to go up driven by higher inflation prospects and a volatile foreign exchange environment – in particular the strengthening of the US dollar against the Thai baht and ringgit.