F&N Holdings sees brighter prospects ahead

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KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) looks set to bounce back from the major setbacks that plagued the company in its last financial year, with several plans lined up for this year.

The company sees further growth potential in its dairy segment, and its new integrated cannery, processing and filling facility in Pulau Indah, Selangor, has the right recipe to support more export opportunities.

“Our plant in Pulau Indah is a halal certified hub. As Malaysia is keen on promoting itself as a halal exporter, we intend to capitalise on that position to further penetrate our export market,” said F&N Holdings CFO Soon Wing Chong after the company AGM on Wednesday.

For this year, F&N Holdings expects to see growth in exports from the dairy segment coming from Indochina.

“A fair bit of growth [in exports] will come from Indochina. This will be serviced through our Thai operations because they are closer to them. It is our resource for regional expansion,” said F&N Holdings CEO Datuk Ng Jui Sia.

Ng said the company will see growth in exports “in the low teens” this year.

F&N Holdings’ operations in Thailand suffered a major blow last year due to flooding, which caused a cessation of activities for 200 days. Since then, it has spent  RM6 million to fence in the facility in Thailand to mitigate further flood risks.

The flood was a double whammy to the company as it lost its business partner of 73 years, Coca-Cola, in the same year following the expiry of its licensing agreement.

For this year, one of the planned projects is a mixed development on its former manufacturing facility land in Petaling Jaya.

The estimated RM1.4 billion gross development value (GDV) project will consist of residential, retail, offices and hotel.

“For Phase 1, the GDV is RM550 million, but subject to approval of the authorities ... Our team is clearing up the place,” said Ng.

“On a parallel basis, the property team, which is a joint venture with FCL Centrepoint Pte Ltd, is in the process of applying for the necessary approvals to launch the project.

“The launch is likely to happen between June and September this year, provided we get approval of all the designs and concepts,” he said.

(From left) Soon, Ng and  Fraser & Neave

Holdings Bhd chairman Tengku Syed

Badarudin Jamalullail at the company AGM

on Wednesday.

Industry experts said the conclusion of the takeover battle of its parent company, Fraser & Neave Ltd,  is expected to benefit F&N Holdings in view of new major shareholder Thai billionaire Charoen Sirivadhanabhakdi’s vast beverage empire.

“The impact would depend on how fast Charoen reveals his plans for F&N in Singapore. But one thing for sure is that F&N Holdings and Charoen’s Thai Beverage plc will be able to leverage on each other’s distribution channels,” said an analyst with a bank-backed research house.

The management of F&N Holdings said it is monitoring the situation in Singapore closely, but for now it cannot comment on the impact of the takeover.

“[The management] of F&N Holdings will work with any major shareholder to assist and explore every practical synergy possible,” said Ng.

F&N Holdings posted a net profit of RM274.03 million on revenue of RM3.24 billion for the financial year ended Sept 30, 2012, despite the loss of Coca-Cola’s contribution.

A year ago, the company recorded a net profit of RM383.13 million on revenue of RM3.92 billion. The stock closed at RM18.30 on Wednesday, up 0.44% from the previous trading day.

 

This article first appeared in The Edge Financial Daily, on Jan 25, 2013.

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