Fraser and Neave (F&N) Malaysia’s food and beverage (F&B) revenue for the third quarter has grown by 4.7%, driven partially by “effective execution of commercial campaigns” during Hari Raya and Harvest festival. Other factors include a return to growth in canned milk revenue from continued efforts to strengthen the route-to-market amidst continuing price competition and a lower export revenue.
According to the latest financial report, the F&B segment of F&N Malaysia posted a revenue increase of 5.5% to RM571.5 million compared to the preceding quarter mainly due to higher Hari Raya festive sales. Correspondingly, its F&B operating profit improved by 87.2% to RM52.7 million from higher revenue, favourable input and packaging material costs and timing of marketing spend for the festive season.
Meanwhile, F&B segment in Malaysia recorded a 7.3% improvement in operating profit from RM49.1 million to RM52.7 million. It is largely attributed to a higher sales volume from both beverages and dairy products, and lower marketing spending.
On a year-on-year basis, F&N revenue for the current quarter grew by 10.9% from RM961.9 million to RM1,066.3 million compared to the corresponding quarter last year, with higher contribution from the F&B segments from Malaysia and Thailand. Group profit before tax rose by 45.3% from RM107.0 million to RM155.5 million from higher profits from the F&B segment in Malaysia, followed by Thailand. Despite the positive performance from Malaysia, the group said said in the report:
The overall domestic market for the F&B segment in Malaysia is expected to remain challenging given the intense competition.
This is especially in the canned milk segment, added F&N. However, for beverages, the company said that it has taken necessary actions, including introducing extensive portfolio of healthier options, to mitigate the impact of the sugar sweetened beverages excise duty effective 1st July 2019.
Going forward, the company aims to prioritise on strengthening its commercial strategies and route-to-market execution. It will also look into “accelerating innovations and improving operational efficiencies” across the businesses to generate profitable and sustainable growth.