F&N records higher Q2 revenue. On a continued growth momentum
- Group revenue increased by 1.5% to RM1,107.7 million for Q2 FY2022, supported by F&B Malaysia’s improved performance.
- F&B Malaysia accelerated revenue growth at 9.0% in Q2 FY2022 to RM615.1 million, driven by successful CNY activations and recovery of economic activities.
- F&B Thailand market dampened by Omicron outbreak in Q2 FY2022 and registered 1.0% revenue decline (in Thai baht terms). However, a strong Q1 performance led to overall 4.6% revenue growth (in Thai baht terms) for the first half year.
- Group revenue for 1H FY2022 up by 1.8% to RM2,214.3 million from RM2,175.0 million in 1H FY2021.
- RM200 million COGS impact in 1H FY2022 from the rise in commodity prices largely mitigated through cost management measures and price adjustments. Group profit before tax for the first half, excluding one-off non-operating items, declined by RM55 million to RM244.1 million.
- New RM148 million CAPEX investment into Liquid Milk & Plant-Based Beverages capability in Malaysia and Thailand.
- Interim single tier dividend of 27 sen per share (2021: 27.0 sen per share) amounting to RM 99 million to be paid on 31 May 2022
F&N in the second quarter
| Financial Highlights | Q2 FY2022 | Q2 FY2021 | Change |
| Revenue (RM million) | 1,107.7 | 1,091.8 | +1.5% |
| Profit before tax (RM million) | 112.0 | 139.3 | -19.6% |
| Adjusted profit before tax (RM million) * | 110.8 | 140.6 | -21.2% |
| Profit after tax (RM million) | 93.9 | 103.5 | -9.3 |
| Basic earnings per share (sen) | 25.6 | 28.2 | -2.6 |
Fraser & Neave Holdings Bhd’s Chief Executive Officer, Lim Yew Hoe says, “As a Group, our results demonstrate our resilience in the face of tremendous pressures on multiple fronts.”
He further explains that the rise in global commodities prices amounted to an additional RM200 million COGS for the first half-year. Through rigorous cost management measures, including price and trade discount adjustments, the Group has significantly reduced the impact on its bottom line.
Excluding one-off non-operating items, Group profit before tax for 1H FY2022 declined by about RM55 million to RM244.1 million from RM299.5 million last year.
Going forward
Regardless of the market environment, the Group remains resolute in its long-term strategies and foresees that these will result in payoffs in terms of further cost savings and new market opportunities soon.
Several of the Group’s CAPEX projects will be completed this year, such as the insourcing of warehousing in Shah Alam, which is expected to deliver savings of about RM1 million every month.
The Solar Photovoltaic (PV) systems at three plants in Malaysia (Shah Alam, Pulau Indah, Bentong) that will come online this year will deliver an estimated electricity cost avoidance of RM3 – RM4 million annually, besides reducing an estimated 9,000 tonnes of CO2e emissions per year.
“For the longer term, we are on track for several other CAPEX projects that will enable the Group to capture value in new market segments. Our new RM20 million Drinking Water production plant and warehouse in Kota Kinabalu signal our confidence and commitment to grow the drinking water business in Sabah.”
“Another significant CAPEX project is our new Liquid Milk & Plant-Based Beverages factory in Thailand, which is in the final stages of commissioning.
“Concurrently, we are also equipping our Pulau Indah plant with Plant-based beverages capability by the end of 2022. Both investments amounting to RM148 million, represent a strategic shift for F&NHB to reduce reliance on condensed milk and enable us to grow our brand in the liquid milk segment,” says Lim.
Prospects
On prospects, the Group anticipates the challenging environment for the industry to continue into the second half of the year, as high input prices, rising freight costs, and geopolitical uncertainties weigh on the Group’s margin while rising inflationary pressures may dampen discretionary spending.
However, the reopened borders and relaxation of quarantine requirements in Malaysia and Thailand are expected to spur economic activity and consumer spending.
“We will focus on accelerating the momentum built in the first half while keeping a tight rein on costs and adapting to the fluid environment. We are confident that the fruits of our strategic plans will enable us to come out on a stronger footing when the markets stabilise again,” said Lim.
Commenting on F&NHB’s proposed acquisition of Ladang Permai Damai Sdn Bhd, Lim said the intention is for the Group to embark on the upstream fresh milk business for downstream production and distribution of fresh milk.
“We are confident that our latest investment will present incremental opportunities for our future growth prospects.
“The Proposed Acquisition is subject to the terms and conditions of the Share Sale Agreement, including the government approvals to be obtained as conditions precedent to completion. More details of the project will be announced once they are completed,” he added.
The Proposed Acquisition is not expected to have any material effect on the earnings of the F&NHB Group for the financial year ending 30 September 2022.
The latest investment also reflected the Group’s confidence in the long-term potential of our markets and our ability to manage the risks of the current landscape while strategies are well placed to drive future growth,” Tengku Syed Badarudin concluded.
In line with the Group’s performance and resilience, the Board declared an interim single-tier dividend of 27.0 sen per share (FY2021: 27.0 sen) for the financial year ending 30 September 2022. This dividend amounting to approximately RM99 million will be paid on 31 May 2022.