F&N to Put Emphasis on Re-Energising A Sustainable Future

In a presentation to its shareholders on behalf of the Board and management during Fraser & Neave’s Annual General Meeting today, F&N Chief Executive Officer, Lim Yew Hoe, highlighted the Group’s positive developments in FY2022 and expressed confidence moving into FY2023.

Shareholders have expressed supports for the Group’s direction as being on track towards future-proofing the business while capturing new opportunities.

“Overall, 2022 has been an exciting year of progress in realising our long-term goals and strategies. We are strengthening our ambition for the Group’s fourth pillar of growth – Halal packaged food, with the acquisition of Cocoaland Holdings Bhd. We are also focusing on our investment for a sustainable future, with proactive measures to build our internal capacity to achieve business and environment objectives,” said Lim.

With the acquisition of Ladang Permai Damai, Lim said the Group is back on track to fulfil its ambition on the upstream fresh milk business for downstream production and distribution of fresh milk, in support of the National Food Security Agenda in dairy and beef.

The Group will own a vertical integration business and operations based on the locally-grown crop for feed to F&N’s dairy farm. The integrated farm will also feature a milk processing facility and will ultimately produce 200 million litres of fresh milk yearly with 20,000 milking cows for the local and international markets.

The Group is looking to invest over RM800 million for the integrated farm, with Phase 1 to be operational in December 2024.

The acquisition of Cocoaland aligns with the Group’s ambition to be a stable and sustainable F&B leader in the ASEAN region. This investment will not only add established Malaysian confectionery and snack brands to the Group’s portfolio but will also serve as a platform to expand into more halal food segments and to meet the rising demand for packaged food products.

“We see huge potential to grow our share in this category, especially in the healthy and functional range. F&NHB plans to build upon Cocoaland’s strengths and invest in the brand to introduce new portfolios such as plant-based and health & wellness products. Currently, we are focusing on the integration of the two businesses and look forward to leveraging the strengths of both organisations to generate synergistic values for shareholders,” explained Lim.

Lim also highlighted the Group’s newly completed liquid milk & plant-based beverages factory in Wang Muang, Thailand. This RM128 million plant represents a strategic shift for F&N to play a bigger role in the health and wellness segment as part of the Group’s commitment to Nutrition and enable the Group to grow its brand in the liquid milk segment.

He added that currently, about 60 per cent of F&NHB’s total portfolio is endorsed with a Healthier Choice symbol or logo, and the Group is targeting to increase this to two-thirds by 2025.

On the business performance front, Lim acknowledged that FY2022 had been a challenging year, but the Group had been resilient and had good reason to look forward to a reinvigorated FY2023.

“Our overall performance in FY2022, especially in the last quarter, has given us ample reasons for optimism. In Q4, we began to see improved margins, attributable to the effective strategies we have put in place in response to the challenging marketplace,” said Lim.

“We are also beginning to see the results of the unwavering focus on our long-term strategies for growth and efficiency. We have been able to follow through with completing our acquisition and capex plans in 2022. The investments we had made in recent years are bearing fruit today,” he added.

As an example, Lim cited that the completion of several capex projects, such as the integrated warehouse and solar PV system, have contributed to savings and cost efficiencies in FY2022.

Moving into 2023, Lim stated that 2023 is expected to be as challenging as 2022, with increasing prices for raw materials on the horizon, potential instability in global supply chains, and the risk of recession that will have repercussions across the entire commodity landscape.

The Group will continue strengthening the company’s cost management measures amidst expected inflation for both commodity goods and raw materials, as well as lingering effects from the COVID-19 pandemic, such as supply chain disruptions and heightened freight costs. He also mentioned that this would not take away the focus on business building, especially in capitalising on the synergies that the Cocoaland and Ladang Permai Damai businesses bring into the Group.

“We are entering a new and exciting era for F&NHB as we expand into new sectors such as dairy farming, confectionery and Halal food products. I am confident that the measures we have put in place will ensure we enter the year on a solid footing to capture new opportunities for our business and stakeholders,” F&N Chairman Y.A.M. Tengku Syed Badarudin Jamalullail commented on the outlook for FY2023.

“Having weathered the storms of the last few years, our team is more united and cohesive than ever. I am proud of our people, who have shown so much resilience in the face of multiple global and domestic challenges. In our pursuit of growth opportunities, we also never lost sight of doing the right thing. Our efforts to date have been duly recognised as we were ranked as one of the ASEAN Top 3 companies for ESG performance at The Edge ESG Awards 2022,” Tengku Syed Badarudin added.

“As F&N celebrates its 140th anniversary in 2023, we have a lot to celebrate about its legacy. But more importantly, we want this to be a celebration of the future. Moving forward, we remain focused on implementing the mid and longer-term initiatives that will enable us to respond to challenges and opportunities confidently and sustainably,” he concluded.

During the AGM, Tengku Syed Badarudin recorded the Board’s appreciation to Dato’ Jorgen Bornhoft for his services and contribution as a Non-Independent, Non-Executive Director for the past nine years and eight months. At the same time, he also welcomed Mr Michael Chye to the Board as a Non-Independent, Non-Executive Director. Mr Michael Chye is the Chief of Beer Product Group at Thai Beverage Public Company Limited.

Shareholders at the AGM approved the payment of a final single-tier dividend of 33 sen per share, amounting to a total dividend of 60.0 sen per share for FY2022 (2021: 60.0 sen per share) and payable to shareholders on 10 February 2023. The entitlement date of the dividend is on 20 January 2023.

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