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Published May 15, 2010

Property boosts F&N's Q2 earnings

By EMILYN YAP


SECOND-QUARTER earnings for local conglomerate Fraser and Neave (F&N) rose sharply on the back of better results across all its businesses - particularly from its property arm.

For the quarter ended March 31, the group posted a net profit after fair value adjustments and exceptionals of $235.9 million. This profit is more than three times the $64.3 million a year ago. Revenue rose 21 per cent over the same period to $1.37 billion.

The property unit alone, Frasers Centrepoint, contributed to 53 per cent of the group's profit before interest, taxation, fair value adjustments and exceptionals (PBIT) in Q2.

The division's PBIT was almost double that last year. Factors behind this include higher margins from pre-sold development projects, profits recognised from new project sales, and higher rentals and occupancies at its investment properties.

Just yesterday, Frasers Centrepoint soft launched Flamingo Valley at Siglap Road. It sold 20 out of the 120 units released, at an average selling price of $1,200 per sq ft. The official launch will happen in the next few weeks.

F&N's food and beverage (F&B) division also did well, with PBIT in Q2 up 27 per cent from a year ago. Sales of beer and soft drinks were especially strong, with demand for the latter rising during Chinese New Year.

The printing and publishing division managed to rake in a positive PBIT in Q2, reversing from a loss in the same period last year.

F&N's profit attributable to shareholders was also lifted by a $21.2 million fair value gain in investment properties, and exceptionals of $44.5 million. Net profit excluding these items would have been $170.3 million - up 89 per cent year on year.

For the second half, F&N's revenue grew 19 per cent from a year ago to $2.83 billion. Net profit after fair value adjustments and exceptionals was $374.4 million, more than double the $153.2 million last year.

The board has declared an interim dividend of five cents per share, payable on June 25.

F&N is positive about prospects, and expects its attributable profit before fair value adjustments and exceptionals to be higher than last year's.

On the property side, more launches are in the works. Apart from Flamingo Valley, Frasers Centrepoint will be launching Waterfront Gold in June, with a target average selling price of $850 psf.

Over in Malaysia, F&N's unit F&N Holdings Bhd sold its glass packaging business. It said yesterday that it divested its entire interest in Malaya Glass Products and will receive cash proceeds of some US$259.6 million. This translates to an estimated gain of RM324.7 million (S$140.8 million).

F&N shares closed unchanged yesterday at $4.70.