F&NHB Aims to Expand Share of Ready-To-Drink Beverages Market with an Enhanced Portfolio of Healthier Choice Products

• 100PLUS full range certified with Healthier Choice logo to meet consumers’ demand for healthier option in the local ready-to-drink beverages market

• F&N expands its healthier product portfolio with F&N Ice Mountain Drinking Water, produced with world class technology that uses six-tier purification process

• Domestic sales driven by effective Chinese New Year marketing and trade promotions. F&B Malaysia posts 7.0 per cent higher revenue in second quarter FY2018

• Interim single tier dividend of 27 sen per share amounting to RM99.0 million

Fraser & Neave Holdings Bhd (“F&NHB” or “the Group”) aims to expand its share in the ready-to-drink market with the introduction of a broader portfolio of healthier choice products while supporting Government’s call for lower sugar content in beverages.

The Group’s newest introduction – 100PLUS Reduced Sugar (with only 4 per cent sugar, the lowest in the industry and WITHOUT any alternative or artificial sweetener), will boost 100PLUS’ total healthier choice portfolio and expand the brand’s reach beyond traditional user occasions. At just 4 per cent sugar but with the full hydration benefits of an isotonic drink, it is an everyday beverage suitable for all occasions.

100PLUS, Malaysia’s leading isotonic beverage currently accounts for one out of every four carbonated beverages consumed by the local market. Since its introduction in 1983, 100PLUS has grown beyond the sports drink segment as an isotonic offering with 90 per cent market share.

Speaking at a media briefing on F&NHB’s first half financial results ended March 31, 2018, F&NHB Chief Executive Officer, Lim Yew Hoe said that the latest improvement in the 100PLUS range enriches F&NHB’s portfolio of healthier offerings which will spearhead the Group’s drive to lead in every segment of the ready-to-drink beverage industry and adapt to consumers’ evolving needs towards healthier options.

The whole range of 100PLUS now carries the Healthier Choice logo including its fruity variants that consist of 100PLUS ORANGE, 100PLUS BERRY, 100PLUS LEMON LIME and the new 100PLUS BLACKCURRANT. The Group has successfully revamped the formula for the 100PLUS fruity variants to meet the criteria for the Healthier Choice logo by the Ministry of Health Malaysia while ensuring that they taste even more delicious despite the lower sugar content.

“Reformulation is a complex process, and we want to ensure that we retain the right balance of taste and flavours that are already favoured by our consumers as well as providing the optimal benefits of rehydration,” Lim added.

F&NHB is also tapping into consumers’ increasing demand for greater convenience and flexibility by offering 100PLUS ACTIVE in powder sachets which are convenient for people who are constantly on the go. Malaysian athletes who recently competed at the Gold Coast Commonwealth Games used the 100PLUS powder sachets to meet their hydration and energy needs while contending at such a high-level competition.

Besides 100PLUS, the Group also broadened its healthier product portfolio with the new F&N Ice Mountain Drinking Water, produced at the newly installed water line at the Shah Alam plant. Every drop of F&N Ice Mountain Drinking Water undergoes a world class six-tier purification process which consists of a three-tier filtration (Ultra, Activated Carbon and Cartridge), followed by Ultraviolet Treatment, Reverse Osmosis and Ultra Shield process. To preserve the water purity, each bottle and cap goes through five decontamination steps using ionised air, vacuum and ultraviolet light during the filling and sealing stages to produce the ultimate clean drinking water.

Meanwhile, the new Aseptic Cold-Filling Polyethylene Terephthalate (PET) line at the Shah Alam plant has begun producing 100PLUS ACTIVE 1 litre pack since March 2018. The commissioning of the new line will further accelerate F&NHB’s expansion into new offerings in the near future.

“We will continue to deliver our “Pure Enjoyment, Pure Goodness” promise to our consumers by offering healthier options without compromising on taste”. Lim said.

Commenting on the performance of its Malaysia operations, Lim said “the successful execution of its Chinese New Year festive promotions, including the launch of the limited edition Classic F&N Orange Crush, and the double-digit growth in exports contributed to revenue growth for the Malaysia operations during the second quarter of FY2018 which grew by 7.0 per cent compared to the same quarter last year”.

However, F&B Malaysia’s first half performance was impacted by market contraction in the beverage categories in Malaysia and floods in Peninsular Malaysia and Sabah in the first quarter. Revenue for F&B Malaysia in the first half ended March 31, 2018 was marginally lower by 0.7 per cent to RM1.18 billion compared to RM1.19 billion last year.

F&B Malaysia’s operating profit in the first half period declined by 24.9 per cent to RM81.1 million compared to the same period last year. This was largely due to higher input costs, the strengthening of Malaysian Ringgit against US Dollar which affected exports’ revenue, and higher advertising and promotions expenditure and sales incentives. The increase in costs were partly offset by operational cost savings and lower overheads.

The Group revenue for the first half ended March 31, 2018 is maintained at RM2,083.5 million while Group profit before tax reduced by 17.2 per cent to RM216.0 million compared to the same period last year. Meanwhile, Group profit after tax decreased 14.9 per cent to RM199.4 million for the first half ended March 31, 2018 compared to the corresponding period in 2017.

F&NHB expects business environments in both Malaysia and Thailand will continue to be challenging with prolonged weak consumer sentiments and intensifying competitive price pressure. Meanwhile, raw and packaging material prices in subsequent quarters are expected to remain volatile following the uptrends in packaging and milk-based commodity prices; compounded by the continuing uptrend of oil prices. The Group has hedged its core commodity requirements for the financial year along with the corresponding foreign currency exposure wherever possible.

“The Group will continue to focus on enhancing efficiencies and boost innovations to meet the increasing needs of consumers towards healthier beverage choices, flexibility and affordability through the introduction of more products with lower sugar content, the right pack sizes and prices,” Lim said.

In line with the Group’s performance, the Board declared an interim single tier dividend of 27 sen per share (2017: 27 sen) for the year ending 30 September 2018. The dividend amounting to about RM99.0 million will be paid on 7 June 2018.