F&N Invest RM30 Million In Capex For 2019 To Ramp Up Innovative Offerings

Kuala Lumpur – Fraser & Neave Holdings Bhd (“F&NHB” or “the Group”) has allocated RM30 million in capital expenditure (capex) for the 2019 financial year to accelerate innovation that would enable the Group to create more tasty and healthier products in tandem with the Group’s promise of ‘Pure Enjoyment, Pure Goodness’.

Investments encompass new production lines and add-ons to expand the capacity and capability of existing lines to facilitate the Group’s extension into new offerings and packaging formats. The latest initiatives complement F&NHB’s continuous drive to improve its efficiency, expand its capacity and capability while leveraging the latest technology to meet consumers’ evolving demand.

F&NHB Chief Executive Officer, Lim Yew Hoe said that consumers’ lifestyle aspiration has driven the growing trend of healthy consumption and it has spurred the Group to sharpen its focus on product and packaging innovations in order to provide enjoyable, convenient and nutritious products.

Although more and more consumers are moderating their sugar consumption, enjoyment remains paramount as they continue to stay loyal to their favourite and trusted brands when making their product purchases.

“This presents us with an opportunity to introduce more products to cater to the different demographics – with lower sugar variant and also full flavour indulgent choices. Consumers’ preference for product enjoyment has inspired us to reintroduce F&N classic brands as indulgent treats for our loyal consumers. This year, the same great tasting flavour from the past were revived in the F&N Orange Crush and Classic Sarsi special edition packs,” said Lim at a media briefing after F&NHB’s 57th Annual General Meeting (AGM) here today.

“Today’s consumers care about the sugar content in their beverages, but they are also keen to try out new and unique offerings that are packed with goodness and delicious taste. The opportunities are limitless, and we are confident that our investments will enable us to accelerate the expansion into new categories and a more extensive portfolio of healthier options this year,” he added.

F&NHB has invested significant effort in its on-going development of healthier products long before government’s announcement on sugar sweetened beverage tax by reducing sugar content of its product without compromising on taste as well as increasing the range of product that meets the Healthier Choice Logo criteria by Malaysia Ministry of Health. The Group has also reduced the sugar index (sugar amount in gram per milliliter of beverage) of its beverage portfolio by 34 per cent since 2004 (from 9.5g per 100ml in 2004 to 6.3g per 100ml in 2018).

Commenting on the impending sugar sweetened beverages excise tax, Lim said that F&NHB support moves by the authorities to promote the health and wellbeing of Malaysians and will focus on bringing the sugar content for most of its products to be below 5 per cent while delivering the same great tastes.

“We are prioritising our efforts by focusing on product categories according to the significance of impact to our Group. Hence, we are investing RM30 million this year at our beverage plant this year to ramp up our capability in new product offerings and packaging formats.”

“The fact that we have 100PLUS Reduced Sugar with only 4g/100ml sugar, means that achieving below the 5g per 100ml threshold is within our innovation range. We will take this as opportunity to fast-track our product innovation in this area,” he added.

F&NHB concluded the year ended 30 September 2018 with a marginally higher revenue at RM4.11 billion compared to RM4.10 billion previous year, underpinned by effective promotions and higher exports sales which mitigated the impact from portfolio rationalisation. The Group’s profit before tax increased 19.5 per cent to RM422.7 million from RM353.7 million while its profit after tax rose 19.1 per cent to RM385.1 million for the year under review compared to the previous year.

Moving into 2019, Lim said that the Group will prioritise on initiatives to capture revenue synergies by focusing on its three growth drivers, namely innovation, excellence in execution and cost competitiveness to generate profitable and sustainable growth.

Meanwhile, shareholders at the AGM approved the payment of a final single tier dividend of 30.5 sen per share, amounting to total dividend of 57.5 sen per share for FY2018 (2017: 57.5 sen per share) and payable to shareholders on 15 February 2019. The entitlement date of the dividend is 29 January 2019.