Update F&N 3Q net profit falls 12% on year to RM60m, revenue higher at RM971m

by **Cals** Thu 07 Aug 2014, 01:02

Update F&N 3Q net profit falls 12% on year to RM60m, revenue higher at RM971m

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Wednesday, 06 August 2014 18:49

KUALA LUMPUR (Aug 6): Fraser & Neave Holdings Bhd (F&N) reported a 12% decline in third quarter net profit from a year earlier as high commodity prices curbed profit at its soft drinks and Thailand dairy units. Group profit was lower as the beverage manufacturer's profit a year earlier had included insurance claims amounting to RM18.32 million.

In a statement to Bursa Malaysia today, F&N said its net profit fell to RM60.3 million in the third quarter ended June 30, 2014 from RM68.33 million. Revenue however rose to RM971.13 million from RM891.21 million.

"As alluded in the second quarterly announcement, Dairies Thailand had a difficult quarter mainly due to high commodity prices especially milk-based products. Coupled with the inability to raise selling price to compensate for the increased production costs, operating profit margins contracted to 5.8% from 9.1% in the corresponding quarter.

"Consequently, operating profit of Dairies Thailand declined by 28.4% from RM25.4 million to RM18.2 million," F&N said.

F&N said its soft drinks unit's operating profit fell on less favourable sales mix, costlier commodities and higher promotional expenses. "The Thailand political situation and Selangor water rationing did not materially impact the quarter’s financial performance," F&N said.

Group cumulative nine-month net profit climbed to RM197.23 million from RM179.47 million a year earlier. Revenue was higher at RM2.85 billion versus RM2.61 billion.

Looking ahead, F&N expects a challenging landscape in markets where it has a presence.

In Malaysia, F&N said the increase in interest rates, high household debt, besides costlier fuel and electricity, might have a negative impact on consumer spending.

"(In Thailand) high input costs could impact margins and in the case of Dairies Thailand, price controls of milk-based products reduce our flexibility to recover cost increases. The group has taken appropriate measures to safeguard our commercial interests," F&N said.