The food and beverage conglomerate said in a statement today it has improved its earnings despite higher interest costs from recent strategic acquisitions, demonstrating F&N’s ability to manage additional financial commitments.
The group’s overall improved performance was attributable to better price management, aggressive cost management measures, and strategic business decisions made over the last two years.
F&N’s Q2 FY2023 revenue grew 8.9% to RM1.2 billion compared to RM1.1 billion in Q2 FY2022 while its operating profit increased 15.1% to RM126 million during the same period.
Its Malaysian food and beverage segment (F&B Malaysia) witnessed a 15% rise in revenue to RM707 million due to positive momentum from festive sales and its Cocoaland contribution.
F&B Malaysia said that it has also ramped up its trade and marketing activities as the country’s economic conditions normalised.
“Despite higher brand investments, F&B Malaysia’s adjusted operating profit grew by 9.4% to RM48.1 million this reporting quarter compared to the previous year,” the statement said.
Its Thai counterpart (F&B Thailand) also achieved strong recovery this quarter due to better price and margin management, as operating profit surged RM26.3% to RM78.1 million compared to RM61.8 million last year.
“Strategic measures to manage price and better discount management had helped moderate slower than anticipated tourist arrivals and lower exports,” it said, adding that F&B Thailand also recorded a marginally higher revenue of RM498.1 million compared to RM491.8 million in the same period last year.
Strategic decisions paid off
F&N CEO Lim Yew Hoe said that the group’s improved performance was due to several strategic business decisions over the last two years that had enabled the company to be more competitive and agile.
“These decisions also laid the foundations for further growth in the marketplace,” he said.
“F&N had a very busy fruitful start, as we navigated the highly fluid and challenging market conditions with better pricing and portfolio strategies,” Lim said.
He added that their investments into renewable energy, flood mitigation, and supply chain management solutions have begun to show long-term cost efficiencies, and improved risk management for their operations.
Furthermore, he said that the group has managed to maintain growth in its existing food and beverage business while integrating new businesses and setting up its agriculture pillar at the same time.
He believes this will showcase the group’s adaptability and resilience as an organisation, which will serve F&N well as it continues to grow and expand its reach.
“F&N today will continue to evolve its business through strategic acquisitions and expansion of its footprint across the food and beverages value chain,” adding that this will put the group in a solid position to become a stable and sustainable food and beverage business.
He said the group is cautiously optimistic going into the second half of the fiscal year as markets continue to recover.
The company’s strategic decisions, he explained, have placed them on a firm footing to defend their margins, strengthen their brands and enable future growth.
The group has declared an interim single-tier dividend of 27 sen per share amounting to RM99 million to be paid on June 1, 2023.
As at 11.06am, the group’s share price was down 22 sen or 0.8% lower at RM27.24, giving it a market capitalisation of RM 9.99 billion.