Fraser and Neave, the Singapore-based drinks-to-dairy group, has booked a "strong" increase in full-year operating profit despite a lower contribution from its dairy unit.

Group revenue increased 5.5% to S$2.42bn, from S$2.29bn (US$1.8bn) in the year ago period. Trading profit increased to S$250.9m, compared to S$185.5m in 2013. Profit attributable to shareholders edged up to S$143.9m, compared to $143.5m last eyar.

In its dairies business, the company booked top line growth of 6%. However, PBIT was down 5% to S$57m.

The company attributed the decrease to "weaker earnings" in Thailand, where currency exchange, higher input costs and the Thai government policy on price control all hit profitability. The group's dairy business in Singapore also saw profits dented by a one-off adjustment despite higher sales, the company added. Elsewhere, dairies Malaysia earnings surged 25%.

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Fraser and Neave delivers strong results in FY2014

·         Revenue increased 5.5 per cent to $2,421.1 million, from $2,294.1 million

·         PBIT 2 was $276.5 million, up 29.3 per cent from $213.9 million

·         Attributable profit1,4 flat against last year at $143.9 million

·         Core business segments registered growth, especially Beverages, despite unfavourable exchange rates

·         Proposed final dividend of 3.0 cents per share, adding to the paid interim dividend of 2.0 cents for a total of 5.0 cents


Financial Highlights

(S$ ’million)

Full Year to

30 September 2014

Full Year to

30 September 2013





Trading Profit









Attributable Profit1,4



Earnings Per Share (basic)(cents)1,4



Net Asset Value Per Share



1     Before 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

4     Continuing operations


SINGAPORE, 13 November 2014 – Fraser and Neave, Limited (“F&N” or the “Group”) delivered strong results for the full year ended 30 September 2014 (“FY2014”).  On the back of a 6-per-cent rise in revenue and improved margins, profit before interest and taxation (“PBIT”) improved 29 per cent to $277 million.   Margin improvement, from 9 per cent to 11 per cent, was driven by favourable product mix and lower input cost in Beverages (comprises Beer and Soft Drinks) and Dairies Malaysia. 

This year, Beverages PBIT rose 42 per cent to $174 million on higher beer and soft drinks sales and improved margins.  Soft Drinks sales grew 2 per cent, led by growth in key brands like 100PLUS, F&N, F&N SEASONS andF&N NutriSoy, and retained leading positions in major ready-to-drink segments in Singapore and Malaysia.  Supported by favourable sales mix, improved operational efficiencies and lower trade discounts, Soft Drinks PBIT jumped 31 per cent.  Similarly, the Group’s brewery[1] in Myanmar also delivered strong results for the year, solidifying its strong leading position with a significant volume growth of 34 per cent.  Revenue and PBIT grew 28 per cent and 51 per cent, respectively, despite the weakening of the Myanmar Kyat against the Singapore Dollar (“SGD”).  In constant currency, revenue and PBIT rose 36 per cent and 61 per cent, respectively.

This year, despite strong topline growth of 6 per cent, Dairies PBIT fell 5 per cent to $57 million, due mainly to weaker earnings from Thailand.  In particular, Dairies Malaysia’s strategy to drive topline growth and margin expansion by focusing steadfastly on route to market excellence has yielded positive results.  FY2014 sales of Dairies Malaysia rose 4 per cent.  As a result of favourable mix, efficiency gains from the Pulau Indah plant as well as the non-recurrence of one-off costs recorded in FY2013, PBIT surged 25 per cent, despite the adverse effect of a weaker Malaysian Ringgit.  Excluding these one-off costs, Dairies Malaysia PBIT grew 8 per cent over the last year.  Although Dairies Thailand registered strong volume growth of 18 per cent on higher domestic and export sales, its FY2014 PBIT fell 4 per cent.  The lower earnings was mainly due to adverse foreign currency impact, higher input costs and the Thai government’s pricing control policy.  In Dairies Singapore, PBIT was adversely impacted by a one-off adjustment, despite recording higher sales of 3 per cent. 

Directors have recommended a final dividend of 3.0 cents per share, which, together with the interim dividend of 2.0 cents, brings the total dividend for the year to 5.0 cents, compared with 15.5 cents in FY2013.  The reduced dividend reflects the Group’s earnings following the distribution of a dividend in specie of all the issued shares in Frasers Centrepoint Limited (the “FCL Distribution”) and the capital reduction of $0.42 per share.  This final dividend, if approved by shareholders, will be paid on 16 February 2015.

Non-Recurring Items

There were four main non-recurring items in FY2014.  Firstly, the Group incurred an exceptional charge of $4 million from the debt restructuring exercise carried out as a result of the distribution of a dividend in specie of all the issued shares in Frasers Centrepoint Limited (“FCL”) (the “FCL Distribution”). 

Secondly, following the completion of the FCL Distribution in January 2014, $18-million of consolidation reserves was released to the income statement. 

Thirdly, arising from the FCL Distribution, a $21-million valuation gain on investment interest retained in a joint venture company was also recognised.

Lastly, the Group also provided for an impairment loss of $96 million (FY2013: $119 million) relating to its investment in an associated company.

In FY2013, the Group incurred one-off charges of $73 million in expenses that arose from the mandatory general cash offer. 

Corporate Development

a)      Vision 2020

As part of the Group’s initiative to provide sharper focus on the food & beverage businesses, over the last 18 months, F&N Directors, together with the senior management team, have undertaken a strategic review of the businesses.  The review was aimed at increasing the size and scale of the Group by leveraging strengths of Thai Beverage Plc Limited (“ThaiBev”) and F&N.  To achieve the objectives, the Directors have set out a 6-year roadmap, named Vision 2020 for the Group. 

Under the Vision 2020 roadmap, F&N will play an integral role in ThaiBev’s vision of becoming a stable and sustainable player in the ASEAN countries.   The roadmap centres on the Group building a solid platform for overseas expansion, focusing on Southeast Asia, via a two-pronged approach: 

-          Strengthening market positions in Singapore, Malaysia and Thailand: Leveraging both F&N and ThaiBev’s distribution and bottling systems, one of the largest and most extensive in Southeast Asia, F&N aims to be leaders in these markets with strong leadership positions.

-          Overseas expansion: Using its operations in Singapore, Malaysia and Thailand as the platform, F&N intends to replicate its successful business models in other ASEAN countries, in particular Vietnam, Myanmar and Indonesia in the next three years.  The Group aims to establish itself as a major food & beverage player in key markets outside of Singapore, Malaysia and Thailand.  It shall continue to identify innovative approaches to existing and new partnerships that enable the Group to stay at the forefront of consumer trends in the food & beverage industry. 


b)      Myanmar Brewery Limited

On 31 October 2014, the Group received the decision on its arbitration with Myanma Economic Holdings Limited (“MEHL”). F&N had announced on 29 August 2013 and 14 September 2013 MEHL’s intention to commence proceedings and subsequently, the receipt of notice of arbitration from MEHL.   

MEHL was in the arbitration seeking to compel F&N to sell its 55 per cent stake in Myanmar Brewery Limited (“MBL”) to MEHL at a price of US$246 million ($313 million).

The arbitral tribunal has ruled on 31 October that MEHL’s valuation of US$246 million does not represent a fair value of the Company’s stake in MBL and that the sale should take place at a price to be determined by an independent valuer to be appointed by both parties, failing which by a valuer named by the arbitral tribunal.

c)       Acquisitions

In April, the Group announced the acquisition of a 70-per-cent stake in Yoke Food Industries Sdn Bhd (“YFI”) for RM55 million ($22 million).  YFI is a Malaysia-based company that manufactures, markets and distributes canned beverages in Malaysia, as well as exports to Singapore, Indonesia and Indochina, under brands such asDay Day, SoSoy, and Juice Secret.  Besides securing YFI’s production capacity in the fast-growing non-carbonated beverages segment, teaming up with YFI also offers an increased opportunity for the distribution and marketing of our brands in Southeast Asia going forward. Together with YFI, the Group will benefit from greater scale and from the broader portfolio of brands, and will strengthen F&N’s position as a leading consumer group in Southeast Asia.


In August, the Group acquired an additional 15 million shares (approximately 1.5 per cent) of Vietnam Dairy Products Joint Stock Company (“Vinamilk”), reaffirming its confidence in the management of Vinamilk.  The additional shares, acquired at a cash consideration of $109 million, brings the Group’s interest in Vinamilk to 11.04 per cent.


d)      FCL Distribution

The distribution of a dividend in specie of all the issued shares in FCL was completed on 8 January 2014.  After the FCL Distribution, F&N no longer holds an interest in FCL.  Returning to its 130-year-old roots, F&N is now primarily a food and beverage company with a vision to become a leading consumer group in Southeast Asia. 

In December 2013, F&N announced a proposed cash distribution of approximately $607 million (or $0.42 per share) to shareholders via a capital reduction exercise.  This cash distribution was made in April 2014. 

Following the FCL Distribution, the cash distribution of $607 million and the interim dividend payment of 2.0 cents per share, net asset value per share dropped to $1.11, from $5.90. 

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Original source: Fraser and Neave