Published February 14, 2009

F&N Q1 net profit tumbles 18% to $89m

One bright spot is the encouraging response to the company's latest property launch

By EMILYN YAP

	Email this article
	Print article
	Feedback

LOCAL conglomerate Fraser and Neave (F&N) yesterday posted weaker results for the first quarter ended Dec 31, 2008 as its property segment bore the brunt of an earnings decline.

The group's Q1 net profit attributable to shareholders was $88.98 million, down 18 per cent from the same period last year, after including $29.2 million in fair value gain on investment properties and $7.7 million in exceptional gain (mainly from negative goodwill arising from the acquisition of an associate).

Excluding these items, net profit would have fallen by almost 50 per cent to $52.06 million. The group's share of losses of associated firms totalled $28 million for the period, against a share of profits of $2.4 million a year ago.

Group revenue also weakened by 6 per cent year-on-year to $1.24 billion in Q1.

F&N's property arm was hit by several factors, including a $12 million allowance for foreseeable losses on an overseas property development project, fair value losses on financial assets and unrealised exchange losses on foreign currency loans in associated companies.

Profit before interest and taxation (PBIT) for investment property and development property activities totalled $57.82 million in Q1 - 44 per cent lower than a year ago.

This has led the group to adopt 'a cautious stance to preserve capital, by selectively launching projects, with the goal to achieve an optimal long term return commensurate with risks within the global markets', according to a press release.

One bright spot is the encouraging response to F&N's latest property launch. Some 350 units at Caspian were sold, and the take-up rate has boosted the group's confidence in the mass-market residential segment.

F&N's food and beverage arm 'continued to show remarkable resilience in these uncertain times', said the group. The segment's PBIT rose 9 per cent from a year ago to $83.6 million in Q1.

However, performance within the segment varied. While the soft drinks, breweries and glass containers businesses did better, the dairies business was affected by losses from an associated company. PBIT from the printing and publishing arm weakened by 8 per cent to $14.1 million in Q1.

As of Dec 31, F&N had $1.69 billion of borrowings repayable within a year and it said it has secured financing of $1 billion. 'We are well able to service our debt,' it reassured.