Fraser & Neave Holdings Bhd Annual Report 2019

WWW . F N . C O M . M Y 076 F R A S E R & N E A V E H O L D I N G S B H D business review > FOOD & BEVERAGES MALAYSIA T he overall domestic market for F&B Malaysia is expected to remain challenging amidst the continuous competitive pressures in the canned milk and the RTD beverage segments. We will continue our relentless focus on Excellence in Execution in route-to-market i n i t i a t i v e s t o en s u r e we c a p t u r e opportunities in every market and every channel. Ha v i ng s pen t a y e a r on i n t en s e reformulations, FY2020 will see a significantly more new product offerings to increase our presence in healthier categories, such as juices, water and milk, as well as to further underline our leadership in the isotonic, carbonated soft drinks, tea, soya and canned milk categories. Within the first quarter of FY2020, we have already launched a number of exciting new products – Sunkist Pure Orange juice which contains at least six oranges per litre; and F&N Sparkling Water in its pure form and in two refreshing flavours (grapefruit and lemon). Building on our condensed milk portfolio, we look forward to enticing consumers with TEAPOT Squeeze in Regular flavour, Gula Melaka and Pandan. At the same time, we will cater to consumers who love our classic recipes such as F&N Sarsi and F&N Orange by launching these in portion controlled 200ml cans. These had been introduced during CNY and proved so popular that they will become a permanent feature in our portfolio. OUTLOOK Throughout the year, we continued our support towards various programmes and collaborations that promote sports development through grassroot sports and mass participative sports, which include Liga Kementerian Pendidikan Malaysia, the Badminton Association Malaysia and the National Sports Council of Malaysia. This year, we returned as the official beverage partner of the Kuala Lumpur Standard Chartered Marathon, as well as more than 50 major marathons in Malaysia, participated by over 300,000 runners. We also kept 6,000 Malaysian pilgrims hydrated while they performed haj during the hot weather in Mecca, with our 100PLUS ACTIVE in powder sachets. Read more about our support towards sports and active lifestyles in our Sustainability Report under the ‘Creating Value for Society’ section. OUR FINANCIAL PERFORMANCE F &B Malaysia’s revenue increased marginally from RM2,154.2 million in FY2018 to RM2,164.8 million in FY2019 due to higher sales of value pack types, higher trade spending, absence of a one-off export-oriented contract packing business in the previous year, and competition in the canned milk segment. F&B Malaysia’s operating profit in FY2019 eased 4.2 per cent to RM161.1 million from RM168.1 million in FY2018. Excluding one-off and non-operating items which include brand support and sales tax refund received last year, as well as equipment written-off and employee separation benefit paid in FY2019, operating profit for F&B Malaysia was 15.5 per cent higher compared to last year. FY 2018 FY 2019 Total Q1 556.1 553.5 Q2 546.3 541.5 Q3 545.9 571.5 Q4 505.9 498.3 2,154.2 2,164.8 -0.5% -0.9% +4.7% -1.5% +0.5% REVENUE (RM million) FY 2018 FY 2019 Total Q1 41.1 52.5 Q2 39.9 28.2 Q3 49.1 52.7 Q4 38.0 27.7 168.1 161.1 +27.5% -29.4% +7.3% -27.0% -4.2% OPERATING PROFIT (RM million) Note: Actual FY 2018 has been restated for MFRS 15 Revenue from Contracts with Customers