F&N's FY20 earnings hit by less fizzy soda sales

BEVERAGE and publishing company Fraser and Neave (F&N) on Wednesday posted a 2.1 per cent dip in net profit to S$149.2 million, as revenue also fell 3.6 per cent to S$1.8 billion for its full year ended Sept 30.

Its revenue was hit by lower volumes from its soft drinks and publishing businesses, it said.

Revenue from its beverage segment fell 6.8 per cent year on year to S$439.4 million, because Covid-19 containment measures taken by the various governments "adversely impacted" sales, especially during the Hari Raya festive season, it said.

But this was slightly offset by revenue contribution from its Emerald Brewery in Myanmar, which began commercial operations about a year ago. Still, earnings from this segment improved on the back of cost management, lower favourable input costs and lower marketing spend in new markets.

Dairies revenue rose by S$10.5 million to S$1.2 billion on the back of higher e-commerce sales in Singapore and strong export sales in Thailand, aided by favourable currency translation. But earnings from the segment fell due to provision for debts and unfavourable input costs, partially offset by a higher profit share in Vinamilk, its associated company in Vietnam.

Revenue for its printing and publishing segment declined by 17.1 per cent to S$230 million, and recorded a loss of S$10.5 million; this was down significantly from a profit before interest and tax of S$9.3 million in the prior year, which had included one-off gains of S$10.7 million from the sale of non-core assets.

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F&N said the closures of non-essential book retail outlets, print plants in China and Malaysia, and the cancellation of textbook adoptions in key markets due to prolonged school closures against the Covid-19 backdrop affected its results. This was despite the business unit executing various cost-management initiatives to mitigate the financial impact of the closures.

The group's earnings per share was 10.4 Singapore cents, versus 10.6 cents a year ago.

The directors have proposed a final dividend of 3.5 cents per share. Together with the interim dividend of 1.5 cents per share paid in June, the total dividend for this year is 5 cents, down from 5.5 cents in the prior year.

The group said that this is for prudence, to maintain a strong balance sheet to give the group flexibility to invest, and to take advantage of opportunities as they arise. If approved by shareholders at the annual general meeting on Jan 21, 2021, the final dividend will be paid on Feb 10, 2021.

The group said that while its fourth quarter results suggest that it is "emerging gradually" from the trough, it remains cautious in its outlook as uncertainty still surrounds the health crisis.

It is optimistic that the recovery will gain momentum soon. Meanwhile, the recovery of its publishing business remains "uneven", and it has taken action to mitigate further losses and to refine its business model to remain relevant post Covid-19.

Its shares closed flat at S$1.22 on Wednesday, before the release of its results.