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F&N Delivers Solid Performance for FY2015/2016

posted 2 Nov 2016, 22:05 by Karen Tan Chui Chui   [ updated 6 Nov 2016, 22:53 by iConnect@ F&N ]

Capitalises on Favourable Commodity Prices to Build Capability for Future Growth 

  • Continues growth trajectory with RM4.17 billion in Group revenue, up by 1.5 per cent 

  • Profit before tax surged 32.7 per cent on the back of favorable milk-based global commodity prices and manufacturing efficiencies 

  • Recommends final dividend of 30.5 sen per share amounting to payout of RM111.8 million 

  • Streamlines and simplifies operating and distribution model through commercial realignment to harness combined strengths

  • Additional capex of RM70 million for its mineral water plant expansion in Bentong, and PET line automation in Shah Alam

  • Additional capex of RM70 million for its mineral water plant expansion in Bentong, and PET line automation in Shah Alam



FULL YEAR 2015/2016 PERFORMANCE

Financial Highlights

Full Year 2015/2016

Full Year 2014/2015

Change

%

Revenue (RM billion)

4.17

4.11*

1.5

Profit before tax (RM million)

442.9

333.8

32.7

Profit after tax (RM million)

385.4

280.1

37.6

Basic earnings per share (sen)

105.3

76.5

37.6

    *restated to conform with current year’s presentation

Kuala Lumpur, 3 November 2016 : Fraser & Neave Holdings Bhd (“F&NHB” or “the Group”) maintained its year-on-year growth despite challenging market conditions, growing revenue by 1.5 per cent to RM4.17 billion from RM4.11 billion recorded in the previous financial year.

The Group’s profit before tax surged 32.7 per cent to RM442.9 million on the back of lower milk-based commodity cost and manufacturing efficiencies.

For the last quarter ended September 30, 2016, the Group reported revenue of RM976.5 million, 4.2 per cent lower, from RM1,019.2 million in the corresponding quarter last year mainly due to revenue from the Hari Raya festivities being recorded in the previous quarter. Profit before tax fell 23.7 per cent to RM51.7 million on the back of soft market conditions and one-off restructuring expenses.

Commenting on the Company’s full year results for the year ended September 30, 2016, F&NHB Chairman Tengku Syed Badarudin Jamalullail expressed satisfaction, highlighting the growth in revenue and 32.7 per cent jump in profit before tax.

“The last 12 months of the financial year 2015/2016 has been challenging due to the overhanging negative sentiments with regard to the Malaysian economy from the business as well as the consumer community. In spite of the dip in the threshold of confidence, the Group performed credibly and delivered solid results. We are confident of enhancing our equity and particularly, the sustainability of our business with the implementation of our realignment programme,” he added.

F&B Malaysia was impacted by softer consumer sentiment. Revenue declined marginally while operating profit was correspondingly lower. Excluding the absence of contribution from Red Bull, operating profit grew by 11.8 per cent aided by a favourable product portfolio mix and margin contribution, favourable milk-based global commodity prices and realisation of manufacturing efficiencies. This was offset by higher professional fees incurred for the commercial realignment, higher warehousing costs and staff restructuring costs.

During the period under review, the Group’s isotonic and carbonated soft drink brands, in particular 100PLUS, est Cola and F&N Fun Flavours registered year-on-year growth from increased focus on sales, distribution and branding efforts, supported by effective trade and consumer promotions and campaigns. Its dairies brands have also maintained their market leadership from continuing effective sales and marketing efforts, along with new introductions like F&N Magnolia UHT and F&N Magnolia Barista.

F&B Thailand reported another stellar performance, posting a robust revenue growth of 8.5 per cent to RM1,639.2 million on the back of strong consumer response to its 9th Anniversary Celebration campaign, new product launches and year-on-year growth of its major brands. This was propelled by effective branding and consumer trade programs. Magnolia Ginkgo Plus has been very well received, achieving three per cent of the UHT Milk market share within the first year of its introduction. Operating profit jumped substantially by 79.7 per cent to RM199.5 million on higher revenue, better product margin contributions and effective advertising. 
 

TRANSFORMING FOR FUTURE GROWTH

F&NHB is priming itself for the future with a steady pipe line of investments and initiatives to enhance its sustainability and take its growth trajectory to the next level.

Strategic initiatives include the realignment exercise to harmonise and optimise the Group’s beverage and dairies operations throughout Malaysia. The commercial realignment which began in October 2016 and scheduled for completion in FY2016/2017, is expected to boost sales volume and improve efficiency through a new distribution strategy.

“The favorable commodity prices gave us the window of opportunity to invest in a major transformation for F&NHB. Throughout FY2015/2016, we conducted various initiatives to boost our sustainability and plan for the future needs of the Group,” said Lim Yew Hoe, F&NHB’s chief executive officer at an analysts and media briefing in conjunction with the review of the Group’s full year financial results.

The Group’s latest capex of RM70 million will include a new 600 bpm water line, expansion of the warehouse, production building and infrastructure at its mineral water plant in Bentong, and Polyethylene Terephthalate (PET) line automation in its Shah Alam plant. The state-of-the-art line will significantly reduce the Group’s soft drinks manufacturing facilities’ carbon footprint as well as pre-bottling storage as the bottles will be blown and formed in-situ on the production line. The projects are estimated to be completed within the next nine months.

With these new projects, F&NHB’s total estimated capex from FY2015/2016 has increased to over RM300 million said Lim. 
 

EXPORT

During the year under review, the Group achieved strong double-digit growth in its export business with a 17 per cent increase in sales. This is in line with the Group’s renewed focus on exports. 
 

PROSPECTS


Commenting on prospects for the current financial year ending September 30, 2017, Lim said, “In the immediate term, the softer domestic and global economic environment and escalating commodity prices do pose a challenge to sustain the pace of growth. In the longer term, the various transformation initiatives will put the Group on a stronger platform for sustainable growth in both revenue and profit.”

“Accordingly, the Group will remain vigilant and respond to changing market dynamics while proactively focus on formulating appropriate measures to maintain its competitive position.

Our transformation journey continues as we look to further strengthen our capabilities and streamline our operations to build the F&N of tomorrow – a lean, sustainable and efficient corporation,” Lim added.

In line with the Group’s performance, the Board of Directors is recommending a final dividend of 30.5 sen per share amounting to RM111.8 million for approval by shareholders at the forthcoming Annual General Meeting of the Company. If approved, the total dividend for FY2015/2016 would amount to 57.5 sen per share (FY2014/2015: 57.5 sen per share).