Fraser & Neave Holdings Bhd recorded 1.5% revenue growth for its second quarter ended 31 March 2022 (Q2 FY2022) to RM1.1 billion from RM1.09 billion in the same quarter last year. Positive momentum from the recovery of economic activities in Malaysia moderated the stifled demand in Thailand affected by the Omicron outbreak.
Revenue for Malaysia increased 9% to RM615.1 million compared to RM564.2 million in 2021, on the back of higher sales from the Chinese New Year festivities. Beverage sales surged double-digit for the quarter, supported by greater out-of-home consumption and improvement in sales to the HORECA channel.
Revenue for food products grew by double-digit from early sell-in for Hari Raya Puasa festive season and successful CNY promotion for its oyster sauce category. Dairies sales registered improved revenue despite a volume decline following price adjustments undertaken in October 2021.
The price increase also impacted export volume in some price-sensitive markets. Improvement in margin and customer/country mix contributed to higher operating profit for exports despite lower revenue versus last year. Exports from Malaysia also faced challenges from shipping disruption due to port congestion and limited shipping vessels to certain regions, and lower volume from Greater China amidst strict COVID-19 lockdown measures.
F&B Thailand revenue in Thai Bhat terms for the quarter declined marginally by 1.0%, whilst revenue in RM terms was more adversely impacted (-6.5%) due to unfavourable foreign exchange translation. The group sustained growth in the domestic sales of sweetened condensed and evaporated milk through effective promotions and loyalty programs in Q2 FY2022.
Higher sales, improved margins from price adjustment, and prudent cost management led to higher operating profit for F&B Malaysia in Q2 FY2022. F&B Malaysia’s operating profit excluding one-off non-operating items (flood and restructuring costs) surged +59.3% to RM43.9 million. Operating profit for F&B Thailand declined by 44.9% (-41.7% in THB terms) to RM61.8 million during the quarter. This is mainly due to difficulty in passing on the significantly higher input costs to customers, as its products are on the Thai government’s price watch list. Group profit before tax for Q2 FY2022 excluding one-off non-operating items due to flood and restructuring costs contracted 21.2% to RM110.8 million compared to RM140.6 million last year.
For the first half ended 31 March 2022, Group revenue increased 1.8% to RM2.2 billion from RM2.17billion last year. Despite higher revenue, the Group recorded a lower profit before tax and profit after tax of RM220.1 million and RM186.8 million respectively in 1H FY2022 compared to the same period last year. This is mainly due to higher commodity prices, flood impact, and forex translation loss from a weaker THB.
F&B Malaysia’s revenue grew by 5.2% to RM1,190.7 million for the first half-year (FY2021: RM1,132.4 million). This was driven by a stronger 2nd quarter performance, partly dampened by the impact of the floods on its Shah Alam operations and the resulting out-of-stock situations. Excluding one-off non-operating items, F&B Malaysia’s operating profit grew by 25.9% to RM91.3 million, attributed to higher beverages sales, improved margin for dairy products, improvement in export customer/country mix, and contribution from Food pillar (acquired in January 2021).
Meanwhile, strong double-digit growth in domestic and export sales in the first quarter contributed to F&B Thailand recording higher revenue in the first half year, which grew by 4.6% (in THB terms). However, unfavourable RM/THB translation led to lower revenue in RM terms, registering a 1.8% decline to RM1,021.7 million. F&B Thailand’s operating profit declined to RM142.2 million due to significantly higher input costs, especially for tin cans and milk powder. Price increase was implemented in March 2022 to mitigate margin pressures.
Commenting on F&NHB’s first-half financial results, F&NHB Chief Executive Officer, Lim Yew Hoe said, “As a Group, our results demonstrate our resilience in the face of tremendous pressures on multiple fronts
He further explained 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 RM55.4 million to RM244.1 million from RM299.5 million last year.
