F&N net profit down 21.4% in second half as input, freight costs rise

BEVERAGE and publishing company Fraser and Neave (F&N) F99 : F99 0% saw net profit decline 21.4 per cent to S$61.8 million for the 6 months ended Sep 30, despite a 3.1 per cent rise in revenue, it said in a results release on Friday (Nov 5) night.

Revenue for the second half was S$890.6 million, up from S$864.1 million in the year-ago period. But profit was hurt by unfavourable foreign currency translation, higher input and freight costs, and a lower share of profit from associated company Vietnam Dairy Products Joint Stock Company.

Earnings per share (EPS) were S$0.043 for the half-year ended Sep 30, and the company has recommended a final dividend of S$0.035 per share.

Together with the interim dividend of S$0.015 per share, this brings the full-year total to S$0.05 per share, the same as the year before. This will be paid on Feb 14, if approved at the Jan 18 annual general meeting.

F&N did not release standalone figures for the fourth quarter. With the latest figures, full-year net profit was down 3.4 per cent at S$145.2 million.

Revenue for the year was up 2.5 per cent at S$1.88 billion, driven by the beverages and dairies businesses, which saw revenue rise 3 per cent and 2.3 per cent respectively.

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The printing and publishing business saw a 3.3 per cent fall in revenue to S$222.4 million, but managed to narrow its loss before interest and taxation to S$2.5 million.

As Covid-19 enters an endemic phase, F&N expects its operating markets to be hit by new waves of infection from time to time, with corresponding business disruptions.

"The group remains cautious and continues to stay vigilant to mitigate the challenges posed by rising input costs, supply chain disruptions, spike in freight charges, adverse foreign currency movements and challenging market conditions posed by any resurgence of Covid-19," it said.

While consumer sentiment is expected to remain cautious, the gradual reopening is nevertheless a positive step towards normalisation of on-premise trade, it added.

But rising commodities prices and weakness in regional currency will put pressure on margins, which may have to be passed on to customers and managed via productivity improvements.

In printing publishing, the business outlook remains uneven, said F&N. "Numerous measures have been taken to re-examine every aspect of our business including making structural changes in the operating cost base which has substantially reduced losses this year."

F&N shares closed unchanged at S$1.45 on Friday before the results release.