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Fraser and Neave Limited’s Latest Earnings: What Investors Should Know

Yesterday, Fraser and Neave Limited (SGX: F99) reported its fiscal second quarter earnings for its financial year ending 30 September 2017 (FY2017). The reporting period was for 1 January 2017 to 31 March 2017.

As a quick background, Fraser and Neave, which is better known as F&N, organizes its business into three main segments: Beverages, Dairies, and Printing & Publishing. You can catch up with the results from previous quarter here.

Financial highlights

The following’s a quick take on some of F&N’s latest financial figures for the reporting quarter:

1. Revenue fell by 5.8% year-on-year to $451.3 million.

2. Net profit attributable to shareholders fell 67.1% to $3.8 million.

3. Earnings per share (EPS) was 0.3 cents, down from 0.8 cents in FY2016’s second quarter.

4. Cash flow from operations was $45.6 million and capital expenditure was $13.9 million. F&N registered positive free cash flow of $31.7 million, a big jump from $6.8 million a year ago ($16.6 million in cash flow from operations and $9.8 million in capex).

5. As of 31 March 2017, F&N had cash and cash equivalents of $666.6 million and $767 million in debt. This is a sharp decline from the cash and cash equivalents of $965 million and $144.4 million in debt recorded a year ago.

For the reporting quarter, F&N experienced a decline in revenue and a sharp fall in profit. F&N also took on more debt to finance the purchase of an additional stake in the Vietnam-based milk products company, Vinamilk. As of 8 May 2017, F&N owns 18.74% of Vinamilk. F&N also generated solid growth in free cash flow.

An interim dividend of 1.5 cents per share was declared, unchanged from last year’s interim dividend.

Operational highlights

The Beverages segment recorded revenue of $113.6 million for the fiscal second quarter, a 21.5% decrease compared to the year before. The segment also recorded a negative PBIT (profit before interest and taxation) of $5.2 million for the quarter.

For the same period, F&N’s Dairies’ segment saw its sales increase 2.4% year-on-year to $271.6 million. The segment’s PBIT soared 41.7% to $39.8 million.

F&N’s Printing & Publishing segment experienced a 4.5% fall in sales, ending the quarter with $66 million. The segment recorded a PBIT loss of $5.6 million.

F&N’s Chairman, Koh Poh Tiong, had some comments to share on the company’s performance in the reporting quarter:

“Even though our performance for the first six months was adversely impacted by weaker regional economies, poor consumer sentiment, more cautious discretionary spending and rising input costs, we continues to maintain our leading positions in our core markets, by offering a wide portfolio products/brands that meets changing consumer tastes and a variety of consumption occasions.

We remain focused on executing the fundamental pillars of our growth strategy – innovating and investing in our portfolio of brands, strengthening our route-to-market and penetrating deeper into New Markets of Indonesia, Myanmar and Vietnam, which have started to show encouraging performance, while continually sharpening our strategies in core market of Malaysia, Singapore and Thailand, in response to changing competitive and market dynamics to deliver long-term sustainable growth.”

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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.