F&N's 9M earnings down 8.2% on Covid-19 impact, East Malaysia flood

THE net profit of beverage maker F&N fell 8.2 per cent to S$118 million for the nine months ended June, as its top line took a hit from lower soft drink sales in Malaysia and printing-plant closures amid the Covid-19 pandemic.

The mainboard-listed firm's revenue for 9M FY2020 dipped 2.9 per cent to S$1.38 billion, due to lower contributions from the beverage and publishing and printing (P&P) segments, which offset a revenue improvement in its dairies business.

9M revenue from the beverage segment fell 8 per cent to $339.1 million. Despite maiden contributions from the new brewery in Myanmar, the segment suffered from lower soft drink sales in Malaysia, given the flooding in East Malaysia and subdued demand amid the pandemic.

Nevertheless, the beverage segment still posted a 14.2 per cent increase in profit before interest and tax (PBIT) to S$14.6 million, lifted by the Myanmar brewery earnings.

F&N's dairies segment remained resilient, with revenue inching up 2 per cent to S$879.3 million, on higher sales in Thailand, Singapore and Indonesia. A successful customer loyalty programme, hawker installation initiatives, wider outlet coverage and new products were the factors that drove growth in this segment.  

Even so, PBIT in the dairies segment shrank 2 per cent on the back of higher commodity and manufacturing costs and the effects of the Covid-19 pandemic in Malaysia. This was cushioned by a higher share of profit from Vinamilk, an associated company of F&N.

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Meanwhile, revenue from the P&P segment fell 15 per cent to S$161.7 million, due to temporary plant closures, deferment of textbooks sales orders and a reduction in print requirement amid Covid-19. The segment posted a loss before interest and tax of S$19.4 million, reversing the S$200,000 PBIT from a year ago.

As at end-June, F&N had S$203.2 million in cash and S$842.3 million in bank borrowings, implying a gearing ratio of 18.9 per cent, up from 12.3 per cent a year ago.

Shares of F&N closed at S$1.34 on Thursday, up 0.75 per cent, before the results announcement.