KUALA LUMPUR (May 3): Fraser & Neave Holding Bhd (F&N) said on Friday that the company will focus on fixed asset optimisation over the next three years, after having allocated more than RM3 billion in capital expenditure (capex) and development of its integrated farm in Gemas.
“Currently, we are in a position where we can enhance our FAT (fixed assets turnover) by 50% to 60% without significant capex. This will be the most profitable avenue for revenue growth,” F&N chief executive officer Lim Yew Hoe said during the company’s half-year financial results briefing (1HFY2024) on Friday.
In the past five years, F&N has allocated up to RM1.5 billion towards capex and business acquisitions, not including the development of an integrated dairy farm in Gemas.
Lim revealed that the company has already invested over RM1.7 billion in the first phase of the Gemas dairy farm project alone. Although the project is on schedule to commence initial milking for its fresh milk venture by early 2025, Lim anticipates that the dairy farm will only reach its breakeven point within the next three years.
“All our business units are now exploring ways to increase revenue without incurring additional capex. This will be our guiding principle for the next two to three years,” he added.
In other developments, F&N signed a 50-year lease agreement in February for an industrial land parcel in Cambodia from Suvannaphum Investment Co Ltd. The deal, worth US$3.86 million (RM18.5 million), is part of F&N’s plan to establish a dairy product manufacturing facility.
The facility is slated to begin operations in the first quarter of 2026. The total cost of setting up the facility, including land lease, construction and machinery purchase, is estimated at US$37.5 million (RM179.5 million).
On the financial front, Lim said the company plans to leverage the group’s recurrent cash flow to optimise its debt levels and minimise financing costs.
On Tuesday (April 30), F&N reported a net profit of RM165.41 million for the second quarter ending March 31, 2024 (2QFY2024). This represents a 63.48% increase from the RM101.18 million profit recorded in the same period last year, driven by higher sales during the Chinese New Year and Eid Mubarak festivals, as well as improved margins.
Quarterly revenue rose by 12.08% to RM1.35 billion, up from RM1.21 billion previously, boosted by festive sales and a favourable foreign exchange translation due to a stronger Thai baht.
F&N announced an interim single-tier dividend of 30 sen per share for the financial year ending Sept 30, 2024. This dividend, amounting to approximately RM110 million, will be paid on May 31.
As of Friday, F&N’s share price stood higher two sen or 0.63% at RM32.02, giving the company a market capitalisation of RM11.74 billion.