Then and Now: Is Fraser and Neave Limited An Investing Opportunity? – Part 2

Here’s the second part of the series on the evolution of Fraser and Neave Limited’s (SGX: F99) business.

In the first part, I looked at how the century-old Fraser and Neave, which is better known as F&N, had changed from a sprawling conglomerate with multiple interests into a more focused company that provides beverages, dairy products, and printing and publishing services.

The changes in F&N’s business make-up has also altered the company’s geographical reach and exposure. Let’s take a quick look at this aspect of F&N’s business.

A geographic then-and-now

F&N Geographical

Source: F&N’s earnings report

As a refresher: F&N had largely moved out of the breweries segment (the making of beer) in late 2012 when it sold its stake in Asia Pacific Breweries to Heineken N.V. (It should be noted that F&N still has a finger in the beer market through its partial ownership of Myanmar Brewery; but as I explained in the first part of this series, F&N may be forced to part ways with Myanmar Brewery soon).

The geographical impact of F&N’s exit from the breweries segment can be seen in the financial year ended September 2013 (FY2013): Revenues from Other ASEAN, North Asia / South Asia, and Outside Asia had noticeably halved in that year as a result.

In early 2014, F&N then exited the commercial and development property business with the spin-off of Fraser Centrepoint Ltd (SGX: TQ5). The outcome of this move had a major impact on F&N’s revenue from Singapore and outside Asia in FY2014.

The two changes mentioned above had whittled down F&N’s business segments to beverages, dairies, and printing and publishing. F&N’s beverages and dairies segment is made up of a 55% stake in the Malaysia-listed Fraser & Neave Holdings Bhd., Myanmar Brewery, F&N Foods Pte Ltd, F&N United Ltd, F&N Creameries Group, and a 11% stake in Vinamilk. Meanwhile, the printing and publishing segment is made out of the previously-listed Times Publishing Group.

In all, the business segment changes that F&N has gone through has turned countries and regions like Malaysia and Other ASEAN into the company’s key operating regions for the future.

Let’s take a look at the geographical spread of F&N’s profits next.

Profit PBIT F&N

Source: F&N’s earnings report

In terms of profit, F&N’s business in Malaysia and Other ASEAN becomes even more critical; more than 90% of F&N’s profit before interest and taxes in FY2014  were generated from both regions. As such, investors may want to keep an eye on these two markets in the future.

We will look at what all these changes mean to F&N’s cash flows and balance sheet next in the final part of this series.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.