F&N's full-year profit jumps to S$1.3 billion

FRASER & Neave's (F&N) full-year net profit has surged to S$1.3 billion from S$108.1 million a year ago after a fair value adjustment and exceptional gain of S$1.2 billion, which arose largely from the realisation of fair value adjustment reserve upon change of interests in Vietnam Dairy Products Joint Stock Co (Vinamilk).

Net profit before fair value adjustment and exceptional items was S$100 million for the 12 months ended Sept 30, 2017, down 8.3 per cent from a year ago.

The lower earnings were attributed mainly to higher finance cost due to borrowings to finance the acquisition of Vinamilk shares, weaker beverages and concentrate sales, and higher marketing expenses.

For the year ended Sept 30, 2017, earnings per share (EPS) was 6.9 Singapore cents before fair value adjustment and exceptional items, down from 7.5 Singapore cents the year before.

After fair value adjustment and exceptional items, EPS is 88.7 Singapore cents in FY 2017, up from 7.5 Singapore cents in FY 2016.

In FY 2017, revenue fell 4.1 per cent to S$1.9 billion, dragged by the decrease in revenue from the beverages, and publishing and printing businesses.

Beverages revenue decreased 13 per cent (-10 per cent in constant currency), to S$499 million in FY 2017. Lower revenue, rising input costs and continued brand investment cost resulted in a loss of S$4 million for beverages, versus profit before interest and tax of S$23 million in FY 2016.

Publishing and printing FY 2017 revenue fell 5 per cent to S$293 million, mainly due to a decline in textbook sales and advertising income from publishing, coupled with lower book volume sales due to a weak Christmas season and poor trade book retail sentiment.

Koh Poh Tiong, chairman of the F&N Board Executive Committee, said: "FY 2017 was a challenging year for our F&B business, as rising input costs and declining consumer confidence had an adverse impact on our earnings. Especially in Malaysia, aggressive discounting by competitors and rising input costs impacted sales and profits."

F&N closed at S$2.53 on Wednesday, down two Singapore cents, or 0.8 per cent.