Fraser and Neave’s profit rises 17% to $751m in 3Q11

And its revenue grew 2% to $1.4b, driven by strong sales in Food & Beverage.

Fraser and Neave, Limited ‘s revenue for the third quarter ended 30th June 2011 grew 2 per cent to $1,432 million, driven by strong sales in Food & Beverage, particularly Breweries. 3Q2011 PBIT dropped 5 per cent to $241 million, dampened mainly by higher provision for Breweries’ share-based compensation expenses.

Resulting from F&N Group’s ongoing review of our businesses, the Breweries arm fully divested its 21.37 per cent interest in Kingway Brewery Holdings Limited in order to focus on its international premium brand strategy for China. Consequently, an exceptional gain of $33 million was realised and boosted 3Q2011 profit after taxation by 41 per cent, to $235 million.

F&B division achieved good revenue and profit growth, despite rising input cost and a strong Singapore dollar, by staying focused on its strategic priorities of brands, innovation, investment and cost management. Breweries continued to record double-digit profit growth, supported by strong regional consumer demand in key markets like Indochina, Indonesia, Papua New Guinea and Singapore. With earnings growth outpacing revenue growth for the fourth consecutive quarter, its earnings for this quarter leapt 13 per cent to $84 million on a 9 per cent jump in revenue, despite input cost pressure and translation losses. Improved operating efficiencies helped offset higher input cost in Soft Drinks. As a result, earnings for the quarter grew 8 per cent to $22 million notwithstanding a 6 per cent decline in revenue.

Dairies’ profitability, on the other hand, continued to be weighed down by rising input cost, particularly in Malaysia. Consequently, despite a 2 per cent improvement in revenue, Dairies 3Q2011 profit dropped 25 per cent to $14 million.

This quarter, earnings from Properties dropped 10 per cent to $117 million, on a 1 per cent decline in revenue. The drop in earnings was due mainly to completion of residential development projects in China and Australia, and lower margins from pre-sold projects in Singapore, which continued to be the main driver for the Properties division.

For the nine months ended 30th June 2011, Group PBIT dipped marginally to $802 million on a 5 per cent increase in revenue. Lower earnings were due to reduced profit contribution from Development Property following construction completion of overseas projects and the reduction of our shareholding in Frasers Centrepoint Trust from 51.9 per cent to 42.7 per cent in February 2010 following the sale of two retail malls to FCT. Exceptional gains of $158 million, which arose mainly from the completion of corporate and debt restructuring of our UK property business and the sale of our interest in Kingway Brewery Holdings Limited, helped push profit after taxation up 17 per cent to $751 million.