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F&N Q2 profit slips 1.5% despite hearty beer business

FRASER and Neave's (F&N) second-quarter comparable profit slipped 1.5 per cent before exceptional items despite a bubbly beer business, the food and beverage company announced on Thursday.

Profit from continuing operations and before exceptional items was S$25.7 million for the three months ended March 31, which led half-year profit to ease 1.3 per cent year-on-year to S$61.4 million.

But that was before a one-off valuation gain of S$21 million that was recorded in the quarter ended March 2014, and did not count discontinued operations. F&N spun off its property arm, Frasers Centrepoint Ltd, in January 2014.

Without removing one-offs, all-in net profit for the three months ended March 31 was up 56.6 per cent to S$26.2 million, or 1.8 Singapore cents per share.

F&N shares closed at S$2.78 on Thursday before the results were announced.

The beverage business led the way in the latest quarter, with profit before interest, taxes and exceptional items up 10 per cent to S$50 million. The beer unit, comprising F&N's contested stake in Myanmar Brewery, continued its vigorous growth with sales increasing by 27 per cent and profit before interest, taxes and exceptionals growing 40 per cent.

F&N's joint venture partner in Myanmar Brewery, Myanma Economic Holdings, won an arbitration ruling that will require F&N to sell its 55 per cent stake to its partner. But the price for that sale is subject to independent valuation after the arbitration tribunal said that Myanma Economic's original valuation of US$246 million was not fair.