BEVERAGE manufacturer Fraser & Neave : F99 0% (F&N) posted a net profit of S$55 million for the first half of financial year 2023 ended Mar 31, a 19.8 per cent decline from the year before.

Cost inflation and foreign exchange effects were cited as factors behind pressures on its margins. Revenue, however, went up by 3.5 per cent to S$1 billion over the same period, the company said in a bourse filing on Friday (May 5).

On a per-share basis, earnings fell 19.1 per cent to 3.8 Singapore cents, from 4.7 cents a year earlier.

“Faced with inflationary pressures and a challenging market environment, F&N maintained strict cost management practices while implementing targeted measures to optimise operational efficiency,” read its statement.

However, the group’s profit before interest and taxation still fell 16.7 per cent to S$105.8 million for the half year.

Profit after tax went up by 19.4 per cent to S$110.9 million after a net exceptional gain of S$28.5 million arising largely from fair-value gain upon remeasurement of its investment in Cocoaland Holding.

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Sales of its food-and-beverage segment grew only marginally as it was impacted by unfavourable foreign currency translation.

After accounting for foreign exchange losses, revenue for food and beverage grew by 6 per cent, supported by increased selling prices, higher beer and soft-drinks volumes on successful execution of festive campaigns and new product launches, as well as improved canned milk sales in Malaysia and Thailand.

Dairies, which is the largest contributor to the group’s results, saw its earnings fall by 15 per cent to S$86.7 million. This was largely due to weaker performance from Vietnam Dairy Products Joint Stock Company, but it was cushioned partially by the 28 per cent profit increase from Dairies Malaysia.

Beverages earnings were also impacted by unfavourable foreign currency effects, as well as higher brand investment. Profit before interest and taxes declined 32 per cent to S$18.4 million.

Revenue for the publishing and printing arm went up by 5 per cent to S$112.9 million, attributed to strong book distribution and retail sales, despite weaker performance from the education segment.  

The segment, however, still saw losses of S$8 million in H1, though it narrowed from a S$11.6 million loss in the corresponding period last year. 

F&N declared an interim dividend of 1.5 cents per share, unchanged from the interim dividend declared a year earlier. It will be paid out on Jun 5. 

Meanwhile, F&N also announced that it has secured extended rights from food and drink processing conglomerate Nestle and Nestec as the exclusive manufacturer and distributor of Bear Brand sterilised milk in Cambodia.

Under this new arrangement, its Malaysian subsidiary will be responsible for manufacturing, distributing, and marketing the milk products from Mar 1, 2023 until 2027.

F&N shares fell 1.8 per cent or S$0.02 to close at S$1.10 on Friday.