Fraser & Neave profit up 7% to $620.6mn

Yet Dairies unit’s profitability down 48% as it continued to be weighed down by high input costs.

Following a record year ending September 2010, Fraser and Neave, Limited (“F&N”) reported Tuesday yet another set of strong results for the financial year ended 30th September 2011, demonstrating the sustainability of its growth strategies.

For the year ended 30th September 2011 (“FY2011”), Group revenue improved 10 per cent to $6.274 billion. Profit before interest, taxation, fair value adjustment and exceptional items (“PBIT”) improved 8 per cent, to $1.152 billion, led by double-digit earnings growth in Food & Beverage (“F&B”).

F&B continued to chalk up solid profit growth this year despite rising input cost and a strong Singapore dollar, by staying focused on its strategic priorities of brand building, consumer-focused innovation, investment and cost management. Lifted by strong beer sales in key markets such as Indochina, Indonesia, Papua New Guinea and Singapore, Breweries earnings surged 23 per cent, to $372 million on a 15 per cent jump in revenue. Similarly, in tandem with strong volume and revenue growth, Soft Drinks earnings rose nearly 40 per cent to $113 million. Dairies’ profitability, on the other hand, continued to be weighed down by high input costs, particularly in Malaysia. Consequently, Dairies earnings was $37 million, down 48 per cent.

Notwithstanding that, F&B posted a 14 per cent improvement in earnings, to $522 million on 12 per cent topline growth in FY2011. Consequently, F&B accounted for about 45 per cent of Group’s profit, up from 43 per cent last year. This improvement demonstrated progress on the Group’s target to re-balance profit contribution from its core businesses.

Properties’ FY2011 revenue grew 11 per cent to $2.128 billion. Although supported by pre-sold residential projects in Singapore and boosted by gains from asset sales, earnings were down 3 per cent to $569 million. The decrease in earnings was largely due to lower progressive recognition from China development projects and deconsolidation of Frasers Centrepoint Trust (“FCT”), its retail real estate investment trust, following the sale of two retail assets last year. In FY2011, Properties accounted for 49 per cent of Group’s profit.

Exceptional gains of $175 million, which arose mainly from the completion of corporate and debt restructuring of the Group UK property business and the sale of its interest in Kingway Brewery Holdings Limited (“Kingway”), helped push profit after taxation up 24 per cent, crossing the $1-billion mark, to $1.114 billion.

The Group’s earnings per share for the year improved 6 per cent to 44.1 cents, and net asset value per share grew 11 per cent to $4.88.

“Our solid business foundation has allowed us to achieve another record year. Our geographic spread, leading brands and strong management team continued to act as the profit growth engine of the Group.

Looking ahead, as we enter a phase of renewed financial turbulence, the strength of our portfolio and soundness of our balance sheet will provide us resilience and enable us to navigate and capitalise on the challenges ahead,” said Mr Lee Hsien Yang, Chairman of Fraser and Neave, Limited.

Directors have recommended a final dividend of 12.0 cents per share, which together with the interim dividend of 6.0 cents, brings the total dividend for the year to 18.0 cents, up from 17.0 cents last year. This final dividend, if approved by shareholders, will be paid on 17 February 2012.

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