KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) reported a 28.5% increase in earnings to RM90.57mil for its second quarter ended March 31, 2016, supported by its food and beverage businesses in Malaysia and Thailand.
The company also reported higher revenue at RM999.17mil, up 6.31% from RM939.89mil previously.
In its announcement to Bursa Malaysia yesterday, the company said revenue from its food and beverages business grew by 8.4% to RM631.5mil from RM582.7mil the previous year, driven mainly by higher sell-in of its core products, stemming from its Chinese New Year festivity-driven consumer and trade marketing programmes.
“Among the various festivity programmes executed, the 100Plus gold-themed “prosperity” can promotion, in particular, was well received by consumers,” it said.
However, the company noted a higher degree of discretionary spending by consumers, resulting in higher trade discounting by competitors and thus, impacting gross margins.
It added that new product offerings from competitors had also increased the local competitive landscape.
The company said operating profit for food and beverages in Malaysia was up 26.5% to RM64.3mil from RM50.8mil on higher revenue contribution, favourable milk-based global commodity prices and improved manufacturing efficiencies.
For the business in Thailand, the company said revenue was up 3.3% to RM367.9mil from RM356.2mil on the back of its increasing network and distribution points, branding programmes and effective execution of trade and consumer marketing campaigns.
Operating profit increased to RM41.2mil from RM34.1mil on higher volumes, favourable product mix, lower trade discounting, favourable milk-based commodity prices, higher manufacturing efficiency and favourable baht foreign currency conversion, it said.
For the first half of the year, F&N reported a significant 72.5% jump in net profit to RM242.23mil, while revenue was up by 3.86% to RM2.05bil.
It said the marginal growth in revenue during the first half was mainly due to the absence of contribution from its Red Bull product.
This is a result of the termination of the exclusive marketing, distribution and sale of the energy drink during the quarter ended Sept 30, 2015.
It said revenue was also impacted by discretionary spending behaviour by consumers post-GST.
Revenue from food and beverages in Thailand grew by 9.1% to RM780mil on higher demand for all its products, it said.
For its prospects for the year, the company said “after-effects” of GST appeared to be prolonged.
“There is an increase in competitors’ offerings in differentiated packaging formats and portfolio expansion, thus increasing consumer choices.
“The ringgit, in particular, although having strengthened in this quarter against the US dollar, may continue to be volatile.
“Nevertheless, in the short term, the group has hedged its foreign currency requirements,” it said.
As for Thailand, it said the effect of El-Nino would have an inflationary impact on the economy and domestic demand.
“Therefore, the market is expected to continue seeing higher trade price competition and end consumer campaigns and programmes which will impact contribution margins,” it said.
