Published November 15, 2008

F&N profit jumps 23% in Q4 to $120m

Property business remains a key contributor to profit; APB reports 7% slide in full-year net


LOCAL conglomerate Fraser and Neave (F&N) yesterday reported net profit of $120.3 million for the fourth quarter ended Sept 30, up 23 per cent from the corresponding period last year.

Fourth-quarter revenue rose 4.4 per cent to $1.29 billion.

The Q4 results brought F&N's full-year net profit after fair value gains and exceptionals to $435.8 million - 15 per cent higher than in the year-ago period. This translates to earnings per share of 31.4 cents, against 28.7 cents a year ago.

Before fair value gains and exceptionals items, however, net profit notched up just 0.3 per cent to $379.0 million.

Group revenue for the financial year increased 5 per cent to $4.95 billion.

Shareholders can expect a final dividend of 8.5 cents per share, bringing the full-year dividend to 13.5 cents per share.

'The group's diversified portfolio of businesses has helped to provide stability in earnings,' said F&N's chairman Lee Hsien Yang. 'The food & beverage (F&B) and commercial property businesses, in particular, have proven resilient in previous economic downturns, and have remained strong pillars for the group, delivering continued profit growth.'

The property business remained the key contributor to profits, accounting for 59 per cent of profit before interest and taxation (PBIT) for the full year.

Within the segment, however, PBIT from development properties dipped 7 per cent from a year ago, while PBIT from investment property and real estate investment trusts (Reits) jumped 22 per cent.

Residential property sales have been affected in today's climate, said CEO of Frasers Centrepoint Lim Ee Seng, and 'next year is going to be pretty challenging'.

But he pointed out some positives. The business continues to recognise profit from residential properties sold; construction costs are easing; and the land bank comprises mostly plots bought at relatively low cost for the mass- and mid-markets. There will still be launches going forward of projects for which construction has started, he told BT.

Commercial properties put up a stronger showing as Reits, malls, offices, business parks and serviced apartments enjoyed almost full occupancies and improved rentals.

Frasers Centrepoint bought a 17.7 per cent interest in Allco Commercial Reit in July. The Reit has since been renamed Frasers Commercial Trust.

Asked about further plans for the Reit, CEO of Frasers Centrepoint Commercial Christopher Tang said that refinancing and recapitalisation plans 'are in the pipeline'.

The F&B business contributed to 37 per cent of group PBIT for the full year. The publishing and printing arm made up the remaining 4 per cent. 'One of the key directions we have set is stimulating faster growth of our non-property development businesses,' said Mr Lee.

F&N unit Asia Pacific Breweries reported a 7 per cent slide in full-year net profit to $123.7 million. This was despite a 12 per cent increase in revenue to $1.998 billion.

APB shares rose 50 cents yesterday to close at $10.60, while the F&N counter shed 11 cents to $3.14.