Profits of 4Q F & N jumped more than four times, expressing a dividend of 30.5 cents


KUALA LUMPUR (November 8): Fraser & Neave Holdings Bhd's net profit quadrupled in the fourth quarter ended September 30, 2018 (4QFY18) to RM81.24 million compared to RM19.65 million a year earlier, thanks to increased contributions from both operations Malaysia and Thailand. The previous year was also affected by restructuring fees and other one-time items.

This targets per share revenue of up to 22.2 cents versus 5.4 cents at 4QFY17. Revenues rose 2% to RM996.64 million from RM976.28 million a year ago. The group recommends interim single dividends of 30.5 cents per share, the same as stated a year ago.

In a statement today, the group said Malaysia's operating profit for F & N jumped 418.7% year-on-year to RM36.5 million during the quarter on the back of higher revenues, lower operating costs and lower overhead, prices lower sugar is partially offset by higher packaging material costs, lower advertising and promotion costs (A & P) and restructuring costs issued last year. Excluding restructuring fees and other one-time items, operating profit grew by 78.4% y-o-y.

In F & N Thailand, operating profit jumped 94.9% y-o-y to RM61.7 million, thanks to higher revenue and favorable input costs.

For the full year, the group's net income rose 19% to RM385.13 million from RM323.38 million in FY17, although revenue only rose slightly to RM4.11 billion from RM4.1 billion a year ago.

"Lower cost and overhead synergies in Malaysian operations, favorable input costs, higher export revenues and lower restructuring costs and other one-time items that occurred compared to the previous year contributed to double-digit profit growth in FY18," said F & N.

Commenting on the prospect of FY19, F & N chief executive officer Lim Yew Hoe said he expects domestic markets in Malaysia and Thailand to remain challenging amid ongoing competitive price pressures and increasingly fierce competition. There will also be effects of volatile foreign currency movements and commodity prices that must be faced.

The group said it had partially protected its core commodity requirements for the coming financial year
appropriate foreign currency exposure wherever possible.

"In Malaysia, we will carefully assess and monitor the impact of customs duties at 40 cents per liter on ready-to-drink drinks containing sugar exceeding 5 grams per 100 milliliters, starting April 1, 2019 as announced during the recent submission of Budget 2019 , including taking appropriate actions as needed, "Lim added.

As for Thailand, the group will start paying corporate taxes next year after the full utilization of promotional incentives provided by the investment board and bring losses from businesses that are not promoted.

Lim added that innovation and rediscovery would be the group's overall strategy to stimulate growth and demand, while trying to meet increasing consumer demand for more affordable, tastier and healthier offers.

F & N shares fell 18 cents, or 0.52%, to settle at RM34.78 today, for a market capitalization of RM12.75 billion. Stocks have jumped 39% in the past 12 months.


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