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F&N Q3 net profit rises 9% on higher dairy, soft drink sales

FRASER & Neave (F&N) on Wednesday posted a net profit of S$54.8 million in the third quarter, up 9 per cent from the same period a year earlier on higher soft drinks and dairy sales.

Revenue in the three months ended June 30 was S$489.7 million, up 6.7 per cent from the same period a year earlier. Revenue from the food and beverage (F&B) division rose 7 per cent to S$427.3 million, with beverages revenue rising 11.6 per cent and dairies revenue rising 5.5 per cent.

Profit before interest and tax (PBIT) from beverages more than doubled to S$6.7 million, on revenue and margin growth in the Malaysia and Singapore soft drinks business. In Malaysia, a successful Hari Raya festive campaign and trade loading of existing and new healthier products lifted soft drinks growth. Soft drinks growth in Singapore was due to improved sales of 100Plus and its variants.

PBIT from the dairies division rose 4.8 per cent to S$77.2 million, due mainly to dairies in Thailand, where revenue rose while marketing spend fell and input costs were favourable.

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PBIT from the publishing and printing division was S$7.4 million, reversing from a loss of S$4.7 million last year. This was due to higher margins, prudent cost management and the maiden profit contribution from newly-acquired Print Lab as well as a non-operating income from the sale of non-core assets.

Earnings per share was 3.8 Singapore cents, up from 3.5 Singapore cents in the third quarter last year.

Net asset value per share was S$1.97 as at June 30, up from S$1.95 as at Sept 30, 2018.

F&N said in its results filing on Wednesday: "Consumer sentiment in the F&B segment is expected to remain challenging with continuing competition as well as volatility in foreign currency movements and raw and packaging material prices.

"In Malaysia, conditions are expected to remain challenging given the intensifying competition especially in the canned milk segment and the implementation of excise duty on sugar sweetened beverages. Management has taken necessary actions, including introducing an extensive portfolio of healthier options, to mitigate the impact of the sugar sweetened beverages excise duty which was effective from July 1, 2019.

"The group will continue to invest in brand-building to strengthen our product portfolio and expect to increase advertising and promotion investments in the last quarter of this financial year."

F&N shares rose one Singapore cent or 0.6 per cent to S$1.67 on Wednesday before the results were announced.