Regional Expansion Helps Lift F&N First-Quarter Gain To $109m

Source : The Straits Times, Feb 15, 2008

FRASER & Neave's (F&N's) aggressive drive to expand its businesses regionally from property development to soft drinks has paid off handsomely.
A breakdown of its first-quarter results by region showed that while Singapore remained the drink and property giant's top profit-earner, markets like Malaysia and other parts of Asia enjoyed double-digit percentage growth in pre-tax earnings.

This drove up profit by 41.8 per cent to $108.6 million for the three months ended Dec 31 last year. The bumper number includes $5.4 million of exceptional gains, mostly from property sales. Revenue rocketed 19.2 per cent to $1.32 billion.

PROFIT CENTRE: F&N's beverages division remains profitable, with gains in its soft-drink arm growing 9.9 per cent and subsidiary Asia Pacific Breweries, which makes Tiger Beer, reporting a profit of $42.6 million. -- PHOTO: ASIA PACIFIC BREWERIES

'The robust profit growth... clearly supports our strategy of industry-cum-geographical diversification,' said F&N chairman Lee Hsien Yang yesterday.

F&N's property arm was the star performer. Pre-tax profit from property development rose 15 per cent to $66 million, with the group benefiting from strong profits booked from earlier sales in Singapore.

F&N sold 120 flats in the 417-unit Soleil@Sinaran in Novena and replenished its land bank by securing a residential site at Boon Lay/Lakeside Drive via a tender.

Revenue from commercial properties rose 21 per cent to $69 million, supported by the high occupancy of retail malls, industrial parks and offices, as well as management fees from Fraser Hospitality's operations.

The beverages division also sparkled, with pre-tax profit in its soft-drink arm growing 9.9 per cent to $15.3 million, while income from dairies jumped 84 per cent to $7.5 million.

F&N's weakest link - publishing and printing - recorded a 6.8 per cent drop in pre-tax profit to $15.4 million.

Earnings per share rose from 6.5 cents to 7.7 cents, while net asset value per share increased from $3.77 to $3.81. No dividend was declared.

F&N said 'economic growth in the Asia-Pacific region is expected to be moderate for the next 12 months'. Still, it expects profit to further improve in the current financial year.

Separately, F&N's 39.7 per cent-owned unit - Asia Pacific Breweries - reported a 5.4 per cent jump in first-quarter profit to $42.6 million.

Its earnings were dented by a $2.1 million provision for professional fees, while revenues rose 19.2 per cent to $567.8 million.

During the quarter, it started production at two plants in India and Laos, bringing its total number of breweries in the Asia-Pacific to 35.