Fraser & Neave Holdings Bhd posted commendable results for its fourth quarter ended 30 September 2020 (Q4) on the back of robust exports and stabilising domestic sales, with a small contraction in Group revenue to RM953.7 million.
Despite higher commodity cost, Group profit before tax grew 21 percent to RM108.3 million from prudent cost controls on overheads and lower advertising and promotions (A&P) spending. Excluding the gain on disposal of “TEAPOT” trademark amounting to RM7.8 million and Covid-19 related expenses recognised in the current quarter, and other one-off/non-operating items in both periods, profit before tax improved by 15.1 percent.
Revenue for F&B Malaysia at RM495.1 million was almost on par with the corresponding quarter last year, led by 2.4 percent growth in export sales in addition to some recovery of domestic sales during Recovery Movement Control Order period. Excluding the effects of one-off/non-operating items in both periods under review, operating profit for F&B Malaysia grew by 8.3 percent.
Meanwhile, higher trade stocks in the domestic Thai market carried forward from the third quarter this year, mitigated by growth in Indochina and export markets saw F&B Thailand’s revenue easing marginally to RM458.0 million. Operating profit surged 20.5 percent (26.7 percent in Thai Baht terms) to RM73.0 million.
“Our performance this year is bolstered by continued efforts in delivering innovative products with effective operational execution to meet consumers’ expectations throughout the year despite challenging circumstances. While we prioritised the availability of our core products to the market, we continued to offer new healthier and better value products that resonated with our consumers,” said Lim Yew Hoe, Chief Executive Officer of F&NHB.
New products launched in FY2020 in Malaysia included Sunkist Pure Juice Drink, 100PLUS Zero, F&N Ice Mountain Sparkling Water, OYOSHI Gold No Sugar Premium Japanese Green Tea, F&N Ready-to-Drink Teh Tarik Ori, as well as three variants of TEAPOT Sweetened Condensed Milk (SCM) Squeeze Tube. F&B Thailand launched CARNATION Plus SCM with 0 percent Fat and 25 percent Reduced Sugar, TEAPOT SCM Squeeze Tube Matcha, and F&N Magnolia Milkies Milk tablets in Classic Malt, Hokkaido Milk and Strawberry Yogurt flavours.
“In Malaysia, we fast-tracked our e-commerce strategies to help consumers have easier access to our products during the Movement Control Order. In Thailand, we harnessed opportunities to build loyalty and drive offtake from our large community of hawker customers in both the domestic Thai market, and in Cambodia and Laos,” Lim added.
Sustained demand for dairy products, boosted by in-home consumption moderated the contraction in F&B Malaysia’s performance this year. F&B Malaysia’s full year revenue declined by 5.7 percent to RM2.04 billion, while its operating profit decreased by 10.0 percent to RM144.9 million during the period under review.
Against a challenging backdrop, exports from Malaysia achieved close to 10% growth driven by more robust sales to the Middle East and Africa, and ASEAN markets. Indochina markets (managed by F&B Thailand) also performed strongly this year with Cambodia and Laos collectively contributing over RM200 million in revenue.
According to Lim, “Total exports from Malaysia and Thailand contributed RM796 million revenue to the Group this year, a noteworthy achievement in light of the pandemic. We would have overachieved our target Group export sales of RM800 million in FY2020 in normal circumstances.”
Commenting on F&NHB’s outlook in the upcoming financial year, Lim said that the Group remains cautious amid the Covid-19 pandemic and local uncertainties as both local and global situations remain fluid and uncertain. While mindful of our operating environment, this pandemic has provided us an opportunity for reset and to ‘reimagine’ our business strategies to fuel growth and innovation.
“Maintaining business as efficiently as possible while safeguarding the wellbeing of our employees and the community remains a top priority. We will continue to focus on process improvements and digitalisation, and relentlessly pursue opportunities to build a stronger and more sustainable business for the future through continued investments in CAPEX and our brands.”
The Group remains committed to its customers and consumers’ satisfaction by adopting innovative strategies to boost customer experience and engagement through F&N Life platform as well as through working closely with e-commerce partners in both Malaysia, Thailand and overseas markets.