F&N H1 net profit dips 2.7% to S$71.8 million

MAINBOARD-LISTED drinks maker Fraser and Neave (F&N) saw net profit dip in the first six months, no thanks to finance costs to fund its Starbucks Thailand investments.

Earnings slipped by 2.7 per cent year on year to S$71.8 million for the six months to March 31, even as revenue rose by 4.8 per cent to S$976.7 million, the group reported on Monday.

Turnover growth was driven by the beverage business, as a new brewery in Myanmar supported sales, and by dairies, after investments in marketing and branding in Thailand.

Still, F&N warned that it expects weaker consumer demand for beverages and dairies in the second half, as movement controls and weaker economies affect its operating markets.

The company said: "Management remains positive that our strong fundamentals, financials and banking facilities will help us weather the ongoing economic headwinds, although it is still too early to rule out adverse financial impact that Covid-19 may further bring, as the crisis is still unfolding."

The group plans to focus on "execution of route-to-market initiatives" in the next two months, and is also on the prowl for overseas and e-commerce partners to grow its distribution.

Even though production of essential goods is still running, supply chains for raw materials have not been significantly affected and distribution logistics are continuing largely intact, F&N told shareholders that the road to recovery from the coronavirus pandemic will be long.

Earnings per share stood at 5.0 Singapore cents, down a tad from 5.1 Singapore cents the year before; net asset value was S$2.07 a share, against S$2.02 as at Sept 30, 2019.

The board has proposed an interim dividend of 1.5 Singapore cents a share, unchanged from the previous year's, which will be paid on June 18. The books will close on June 3.

F&N shed S$0.02, or 1.36 per cent, to S$1.45, before the results were announced.