F&N Posts 41.8% Rise In Q1 Net Profit To $108.6m

Source : The Business Times, February 15, 2008

FRASER & Neave has gotten off to a good start in the current financial year by reporting a 41.8 per cent jump in net profit to $108.6 million for the first quarter ended Dec 31, 2007, from $76.6 million for the previous corresponding period.

The profit attributable to shareholders included an exceptional gain of $5.4 million mainly from the disposal of properties. But even without including exceptional items, net profit for the quarter surged 33.2 per cent to $103.2 million from $77.5 million.

'This impressive profit growth stemmed from the progressive recognition of development property income and continued growth in food and beverage,' said the property, publishing and food and beverage group. Turnover for the quarter climbed 19.2 per cent to $1.32 billion from $1.11 billion the year before.

Earnings per share after exceptional items rose to 7.8 cents from 6.5 cents despite the increase in issued share capital, almost all attributable to the 14.9 per cent stake sold to Temasek Holdings. Net asset value per share strengthened to $3.81 from end-September 2007's $3.77.

Former SingTel head Lee Hsien Yang, who took over the chairmanship of F&N on Oct 15, said: 'The robust profit growth in this quarter clearly supports our strategy of industry-cum-geographical diversification. Our businesses in the core markets of Singapore, Malaysia, Indochina and Australia have all contributed strongly to the sterling results.

'The profit performance was led by the property division which has benefited from strong profits booked from earlier sales launches in Singapore and healthy rental rates achieved from new and renewed leases. The food & beverage division continued to benefit from its regional expansion strategy and turned in a set of sterling results.'

The property division saw profit before interest and tax (PBIT) rising 15 per cent to $66 million, benefiting from higher development margins.

During the quarter, the group secured a residential site at Boon Lay/Lakeside Drive through a tender, covering some 830,000 square feet of developable area. This mid-end segment site is expected to yield a potential pipeline of over 600 units. Including this, the group now has a total land bank of close to 3,000 residential units with total estimated saleable area of four million sq ft. Overseas, in China, Australia and Britain, it has over 34 million sq ft of residential and commercial development space.

Beer maker Asia Pacific Breweries, which is nearly 40 per cent owned by F&N, also delivered a healthy set of results with Q1 net earnings (after exceptionals) attributable to shareholders going up 5.4 per cent to $42.6 million from $40.4 million on a 19 per cent rise in turnover to $567.8 million.

Its chief executive Koh Poh Tiong said: 'Once again, Indochina (ie Cambodia, Laos and Vietnam) has excelled as our best performing region, reporting a robust volume growth of 37 per cent and a PBIT gain of 23 per cent . . . This stronger set of numbers is a testament to our intra-market growth strategy.'

F&N's soft drinks side grew 12 per cent in revenue on higher volume and a price increase but this was offset by higher raw material prices and input costs resulting in PBIT going up only 10 per cent.

The dairies division saw consolidated revenue rising twofold to $254 million but PBIT was a lesser 84 per cent to $7.5 million due to lower margins from its Thai operations and higher raw material and packaging costs.

Its glass containers segment registered revenue and PBIT growth of 10 per cent and 19 per cent, to $35 million and $4 million.

Revenue and PBIT for the publishing and printing segment declined by 2 per cent and 7 per cent respectively, due to the divestment of the Australia printing plant and lower profit from its printing division.

On the Singapore Exchange yesterday, APB saw its share price rise six cents to $13.56 while F&N ended 22 cents up at $4.93.