F&N net profit affected by rising prices of commodities

PETALING JAYA: The rising prices of commodities are putting pressure on Fraser & Neave Holdings Bhd (F&N).

The beverage maker said the higher input cost had contributed to the group’s 13.6% decline in net profit in the second quarter ended March 31 to RM92.56mil.

The company said in a filing with Bursa Malaysia that the drop came on the back of a 2.2% increase in revenue to RM1.01bil,

“Raw and packaging material prices in subsequent quarters are expected to remain volatile, following the uptrend in packaging and milk-based commodity prices, compounded by the continuing uptrend in oil prices,” F&N said.

The group derived 58% of its revenue from Malaysia, while the rest was generated from Thailand.

To mitigate the impact of the swings in raw material prices, F&N said it had “hedged its core commodity requirements” for the financial year along with the corresponding foreign currency exposure “wherever possible.”

Meanwhile, the group said operational cost savings from the transformation initiatives and efficiency through process improvement are expected to contribute positively to the Malaysian operations in the coming quarters.

The company said its Malaysian and Thai businesses are expected to benefit as a net importer from the strengthening ringgit and baht against the US dollar.

F&N has also declared an interim single-tier dividend of 27 sen per share for the year ending Sept 30, 2018. The dividend, amounting to about RM99mil, will be paid on June 7.