Fraser & Neave Holdings Bhd (“F&NHB” or “the Group”) is transforming its decades-old route-to-market strategy in Malaysia which will see the Group roll out a unified nationwide system to deepen and widen market penetration this year.
The exercise, piloted in the Northern Region late last year, employs a combined route-to-market approach, to ensure even greater product access to its total portfolio and optimised operational efficiencies.
“Now a unified team, will extend the full complement of our soft drinks and dairies portfolios to all F&N outlets resulting in more business for our distributors, more products for our customers and even better efficiencies for us. This is expected to increase our market presence and potentially boost sales up to RM300 million in the coming years,” said F&NHB Chief Executive Officer, Lim Yew Hoe at the Group’s 55th Annual General Meeting here today.
Apart from that, F&NHB is re-evaluating its business model across all aspects of its value chain from the extensiveness of its portfolio, product and packaging innovation to warehousing and logistics. This exercise will place the Group on a firmer footing for sustainable growth and extend its offerings beyond traditional markets.
Lim said F&N will sharpen its focus on optimising the number of SKUs in each of its product categories while exploring just-in-time production to eliminate unnecessary inventory, warehousing and logistics costs.
Product packaging and innovation strategies will be introduced to cater for the specific needs of its diverse customer base from individual consumers, hotels, restaurants and cafes (HORECA) and industrial customers in the food, beverage and confectionery sectors. “We will move away from the one-size-fits-all concept to customise our packaging and also our product offerings,” he added.
These initiatives are part of the Group’s major transformation programme, which began in October 2015.
“As our transformation journey continues, our focus for the year will be to capture value from the exercise. We will intensify efforts to improve our cost and revenue efficiencies to further enhance the Group's sustainability and create added shareholder value. Similarly, we are putting more focus in growing our export business to be a key business pillars in FY2017 and the years to come,” added Lim. Within just one year of renewed focus on export, the Group’s Malaysian export business grew by 31 per cent.
Growing its export business, which represents the third pillar for F&NHB, is a natural progression after successfully expanding its business in Thailand; the Group’s second pillar. Today, the business not only contributes significantly to the Group’s revenue and operating profit, its strong market presence is evident throughout Thailand with street teas and coffees being synonymous with its canned milk brands.
For the year ended 30 September 2016, F&NHB continued its growth trajectory, expanding revenue by 1.5 percent to RM4.17 billion from RM4.11 billion recorded in the last financial year. Group profit before tax rose 32.7 per cent from RM333.8 million to RM442.9 million year-on-year.
Commenting on prospects for the year, F&NHB Chairman Tengku Syed Badarudin Jamalullail said the Group foresees another challenging period but remains confident that with its transformation strategies in place and 133-year foundation in heritage, product diversity and geographical reach, F&NHB will maintain its leadership in the industry and weather the economic and market headwinds.
“We expect FY2017 to continue to be challenging, as both the domestic and global economic environment look set to remain soft and volatile, compounded by escalating commodity prices and depreciating Ringgit. The Group recognises that there will never be a lack of challenges in any environment. We are confident that the ongoing transformation will create a leaner, more resource and asset-efficient organisation, and enhance our ability to achieve sustainable growth in both revenue and profit.
We will also closely monitor the changing market dynamics and adapt tactically and strategically to maintain our competitive edge,” he added.
Meanwhile, shareholders at the AGM approved the payment of a final single tier dividend of 30.5 sen per share to be paid on 6 February 2017 (2015: final single dividend of 35.5 sen per share).