Fraser and Neave first quarter profit up 68% to $315mn

Yet its earnings from properties down 16% to $108mn behind reduced contributions from China and Australia development projects.

Following a record year in 2010, Fraser and Neave, Limited (“F&N”) began the new financial year on a very positive note. Revenue for the first quarter ended 31 December 2010 grew almost 10 per cent to $1.55 billion. Profit before interest, taxation, fair value adjustment on investment properties and exceptional items (“PBIT”) surged 13 per cent to $299 million. Exceptional gains of $102 million, which arose mainly from the completion of corporate and debt restructuring of our UK property business, helped push profit after taxation up 68 per cent to $315 million.

Consequently, earnings per share climbed 72 per cent to 17.0 cents. Excluding fair value adjustment and exceptional items, earnings per share climbed 14 per cent to 11.1 cents. Net asset value per share increased marginally to $4.55, as stated in a Fraser and Neave report.

Supported by strong brands across multiple geographies, Food & Beverage (“F&B”) continued to register strong revenue and profit growth. Buoyed by strong volume gains and contributions from new breweries in Indonesia and New Caledonia, Breweries earnings soared 45 per cent to $122 million. Similarly, fueled by strong sales and favourable sales mix, Soft Drinks earnings rose 68 per cent to $37 million. However, increasing input cost pressure over the past months has adversely affected Dairies’ profitability. Despite a 12 per cent improvement in revenue, Dairies profit dropped 28 per cent to $14 million. Notwithstanding that, F&B profit surged 38 per cent to $173 million, and surpassed Properties to become the Group’s largest contributor with 58 per cent of Group profit. PBIT margin remained strong, at 17 per cent.

Earnings from Properties, which continued to be supported by pre-sold development projects, dropped 16 per cent to $108 million on a 14 per cent decrease in revenue. The drop in earnings were due mainly to reduced contributions from China and Australia development projects and deconsolidation of Frasers Centrepoint Trust (“FCT”), where the Group’s shareholding was reduced to 42.7 per cent, from 51.9 per cent, in February 2010 following the sale of two retail malls to FCT.