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Friday, 5 May 2017

(The Edge) F&N capex rises to RM500m

Group allocates the additional RM200m for ongoing projects in Malaysia, Thailand

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) is allocating an additional RM200 million for capital expenditure (capex), on top of the RM300 million announced previously, to develop ongoing projects in Malaysia and Thailand.

“Aside from our previous RM300 million capex allocated earlier, we have identified RM200 million for our ongoing projects that have already been approved by our board,” said its chief executive officer Lim Yew Hoe.

“This would bring our capex for the next three to four years to a total of RM500 million,” Lim told a media briefing yesterday. The additional RM200 million capex will be invested in several projects, including two in Shah Alam — a water processing line expected to be completed in the first quarter of 2018, and an integrated filling machine project by end-2018.

On its Thailand operations, Lim said the group plans to add a filling machine to its plant in Pak Chong, as well as filling and processing lines for its Rojana plant — which will be completed progressively between the first and final quarters of 2018.

Lim also shared that the group plans to hit a total of RM800 million worth of group-wide export sales by the financial year ending Sept 30, 2020, from both its Thailand and Malaysia operations.

“Exports currently account for about 10% of our total group revenue,” he said, adding that the group is planning to expand its export market to the Middle East and South Asian countries, such as Pakistan.

For its Malaysia operations, the group’s operating profit for the first half ended March 31, 2017 (1HFY17) declined 26% to RM107.96 million from RM145.9 million in the previous corresponding period, primarily due to lower domestic sales and higher input costs, particularly for sugar.

“Beverage pricing during [the] Chinese New Year was relatively lower than [in] previous years, and if you put lower selling prices, combined with increasing sugar prices, it reflects the current [market] situation,” said Lim.

Asked whether or not F&N can maintain its current pricing level amid the rise in sugar prices, its chief financial officer Tan Hock Beng said the group’s main concern is to maintain its competitive position in the market.

“At the moment, we are holding our prices. We have to consider the dynamics of the market, [and also keep in mind] that it is very volatile, [but] we are monitoring it very carefully,” he said.

F&N’s overall net profit for 1HFY17 fell 3.25% to RM234.36 million, from RM242.23 million in 1HFY16. Revenue was flat at RM2.08 billion.