Earnings in F&Ns dairies division grew nearly threefold

Earnings in F&N's dairies division grew nearly threefold

Fraser and Neave has booked an increase in earnings for the full year, boosted by strong performances from its dairies and soft drinks divisions.

In the 12 months to the end of September, the group's profit after tax was up 0.3% at S$763m.

Trading profit reached S$698m (US$558.1m), up from S$464.8m a year earlier.

Earnings in the firm's dairies division grew nearly threefold to S$60m, primarily due to the recovery of its business in Thailand from the effects of floods in 2011.

Meanwhile, profits from the company's dairy arm in Malaysia grew mainly on lower input costs and decreased conversion costs.

Sales from F&N's dairy business was up 7% at S$1.04bn.

Group sales rose 5% in the period to S$4.34bn, boosted by strong margin recovery in most business units.

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F&N reports strong FY2013 PBIT of $786m on sales of $4.3b

·         Food & Beverage continues to enjoy robust growth

o   Beverages profit rises 18 per cent to  $122 million on strong Soft Drinks and Beer sales

o   Dairies profit nearly triples to $60 million

·         Properties earnings jump on strong and sustained residential sales

o    Strong pre-sales in Singapore supports Development Property earnings

o    Higher fee and rental income drive REIT and Hospitality earnings 

Financial Highlights

($ ’million)

Full-Year to

30 Sep 2013

Full-Year to

30 Sep 2012

Revenue

4,344.1

3,569.0

Trading Profit

698.0

464.8

PBIT2

786.2

540.8

PAT3

5,514.6

1,012.4

Attributable Profit1

5,431.0

837.5

Earnings Per Share (basic)(cents)

-          Before gain on disposal of discontinued operations, fair value adjustment and exceptional items

-          After gain on disposal of discontinued operations, fair value adjustment and exceptional items

37.8

 

 

376.8

 

33.2

 

 

59.0

 

Net Asset Value per ordinary share

$5.90

$5.32

 

1     After fair value adjustment and exceptional items

2     PBIT denotes profit before interest, taxation and exceptional items

3     PAT denotes profit after taxation and exceptional items 

SINGAPORE, 12 November 2013 – Driven by strong sales in Food & Beverage (“F&B”) and Properties, Fraser and Neave, Limited (“F&N” or the “Group”) today announced another year of strong growth in revenue and profit before interest and taxation (“PBIT”) for the full-year ended 30 September 2013 (“FY2013”).  

Full-year revenue improved 22 per cent over last year to $4,344 million.   Boosted by strong margin recovery in most business units, FY2013 PBIT jumped 45 per cent to $786 million.  Properties, primarily the Group’s wholly-owned subsidiary Frasers Centrepoint Limited (“FCL”), continued to be the lead profit contributor, making up 72 per cent of Group PBIT.  F&B contributed about 23 per cent.  

Properties FY2013 earnings improved 55 per cent to $566 million, led by strong and sustained residential sales, and growing earnings from property and investment management.  Similarly, F&B also delivered a strong FY2013 earnings growth of 47 per cent to $182 million on improved consumer demand, strong trade and market execution as well as lower input costs and favourable sales mix.  

Subsequent to the disposal of F&N’s entire interest in Asia Pacific Breweries Limited (“APB”), the remaining beer business has been grouped with Soft Drinks to form the Beverages division.  In FY2013, Beverages PBIT rose 18 per cent to $122 million on higher soft drinks and beer volumes, as well as favourable sales and channel mix.  As at end-FY2013, the Group retained leadership positions in the ready-to-drink segments of Singapore and Malaysia.  Similarly, the Group’s brewery in Myanmar sustained strong volume growth and maintained its domestic market leadership position with its core beer brands Myanmar Beer and Andaman Gold

Dairies PBIT grew nearly threefold to $60 million in FY2013 mainly due to the strong recovery of its dairy business in Thailand from the effects of floods in 2011, contributing to an overall 7-per-cent jump in revenue.
   Dairies Thailand earnings has returned to pre-flood levels while Dairies Malaysia’s profitability grew mainly on lower input cost, decreased conversion costs and bad debts recovery, although volume growth was almost flat against last year.

Properties continued its sterling performance with FY2013 earnings of $566 million, up 55 per cent from a year ago, powered by Development Property and Commercial Property.  Development Property PBIT jumped almost twofold to $379 million, driven mainly by higher progressive revenue recognition from private residential projects currently under development in Singapore, and boosted by revenue recognised on completion basis for projects like One Central Park, phase 1 of One Central Park, in Australia, Baitang One phase 2A in Suzhou, China and Esparina Residences, an executive condominium in Singapore.  These residential projects were completed this year, allowing for recognition in this financial year.  Commercial Property, which comprises Investment Property, REITs and Hospitality, also recorded double-digit earnings growth, bringing FY2013 PBIT to $187 million.  This performance was achieved despite the absence of rental income from two investment properties following the divestment of a Hong Kong-listed subsidiary in September 2012. 

In November 2012, F&N completed the disposal of APB for $5.58 billion.  Consequently the Group realised a disposal gain of $4.75 billion, pushing FY2013 profit after taxation to $5.51 billion.  Correspondingly, earnings per share (“EPS”) from continuing operations rose from 59.0 cents to $3.768 in FY2013.  Excluding the gain on APB sale, fair value adjustment and exceptional items, EPS improved 14 per cent to 37.8 cents.

Directors have recommended a final dividend of 12.0 cents per share, which, together with the interim dividend of 3.5 cents, brings the total dividend for the year to 15.5 cents, compared with 18.0 cents in FY2012.  The reduced dividend reflects the Group’s earnings following the loss of contribution from APB and the capital reduction of $3.28 per share.  This final dividend, if approved by shareholders, will be paid on 18 February 2014.

Corporate Developments

On 27 August 2013, the Group announced a proposal to list its property arm, Frasers Centrepoint Limited (“FCL”) by undertaking an in-specie distribution of FCL shares to F&N shareholders. Upon obtaining all relevant approvals, F&N shareholders will receive two FCL shares for every one F&N share owned, at no cost and with no adverse tax impact.  FCL shares are expected to be listed by way of introduction on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”). 

Following the proposed demerger of the property business, the Group will remain listed on the SGX-ST, but no longer hold an interest in FCL. F&N and FCL shares will be traded separately on the SGX-ST.   As FCL shares will be listed by way of an introduction, neither F&N nor FCL will receive cash proceeds from the listing. F&N shareholders will enjoy direct equity ownerships and have flexibility to decide on their equity exposure to two independently-listed companies in distinct sectors.

The Group announced that FCL had on 25 October 2013 received the letter-of-eligibility from the SGX-ST for the listing of its shares.  A circular outlining the details of the above transaction has been dispatched to F&N shareholders, and an EGM is scheduled for 13 November 2013.  The confirmation of the Books Closure Date and the listing of FCL shares are expected to follow thereafter, subject to the Group obtaining all relevant approvals. 

After the transaction, F&N will focus on growing its F&B business, as well as strengthening its position and extending its reach as a leading consumer group in Southeast Asia. The Group believes Southeast Asia has tremendous untapped potential, and plans to further penetrate this market by strengthening its route-to-market and product development capabilities in the region, while leveraging on alliances with strategic partners, including Thai Beverage Public Company Limited. F&N’s robust balance sheet will also enable it to explore growth through acquisitions as suitable opportunities arise.

The proposed demerger will reinforce FCL’s position as a full-fledged international real estate company with a diversified portfolio of residential, commercial and hospitality properties. Post-listing, FCL is expected to be one of the largest listed property companies on the SGX-ST by market capitalisation.  As a standalone listed entity with its own independent Board and management team, FCL will enjoy greater corporate visibility and have direct access to capital markets to pursue its growth strategies. 

Original source: Fraser & Neave