F&N numbers lagging with squeeze on dairy section
KUCHING: Fraser & Neave Holdings Bhd ( F& N) recorded a laggard second quarter financial year 2013 (2QFY13) net profit of RM111.7 million with the dairy section facing a squeeze.
Based on a research report by the research arm of MIDF Amanah Investment Bank ( MIDF Research), F& N’s first half financial year 2013 ( 1HFY13) revenue registered a strong 19.1 per cent year on year ( y- o-y) growth mainly due comparisons with a weak base a year back when the Rojana Dairies plant was hit by f loods in Thailand resulting in 200 days of plant closure.
This gave rise to a 120.3 per cent y- o-y revenue improvement to RM508.2 million, overtaking Dairies Malaysia as the second largest revenue contributor in 1HFY13.
Growth was also powered by the Chinese New Year festivities which began February 10 this year which saw revenue contribution from soft drinks increase 6.1 per cent y- o-y to RM762.4 million .
The research house noted that the upside potential was limited, however, by a 7.4 per cent y- o-y decline in contribution from Dairies Malaysia to RM484.9 million as a result of lower sales volume and higher discounts, and possibly from a disruption in the distribut ion system arising from the relocation of the Dairies Malaysia plant to Pulau Indah.
In addition, there was an absence of revenue from the property segment given that the progress on the development of the former Dairies Malaysia site in Section 13 was only at the application stage.
Growth accelerated further at the operating profit level to 22.1 per cent y- o-y in 1HFY13.
“Given the general easing in commodity prices, we would attribute this enhancement to an improved gross profit margin.
“Another possible contributor may be the reduction in operating expenses incurred per RM1 of revenue, attributable to the Pulau Indah plant,” it added.
MIDF Research also highlighted that 1HFY13 pre-tax profit recorded a smaller growth of 18.6 per cent y- o-y stating that the main dampening factor was a 183.3 per cent y- o-y increment in net interest expense to RM5.1 million.
“We also note a slight reduction in contribution from Cocoaland Holdings Bhd by 12.5 per cent y- o-y to RM2.4 million.”
Despite the positive growth seen at the revenue, operating
Given the general easing in commodity prices, we would attribute this enhancement to an improved gross profit margin.
MIDF Research
profit and pre- tax profit levels, 1HFY13 net profit took a 24.9 per cent y- o-y dive to RM111.7 million.
This decline was attributable to comparison being made with a higher base a year back when a tax income of RM37.6 million was registered relating to tax incentives on the Pulau Indah plant.
The 1HFY13 on the other hand, recorded a tax expense of RM20.1 million.