SHAH ALAM (Nov 6): Fraser & Neave Holdings Bhd (KL:F&N) sees minimal impact from the upcoming sugary drinks’ tax increase, as the products affected are less than 1% of its total sales contribution.
“We support the ministry’s stance on taxing products with more than five grammes of sugar per 100ml.
“We are evaluating how we should deal with this because reformulating certain items, such as energy drinks, is difficult since sugar plays a vital role in providing energy. You cannot simply replace it with caffeine and taurine alone, without sugar,” F&N chief executive officer Lim Yew Hoe said at the group’s post-results briefing on Wednesday.
The company estimates that the increased sugary drink tax will result in an additional tax expense of approximately RM1.2 million, a minimal amount compared to its annual revenue exceeding RM5 billion.
Nonetheless, the group is looking at ways to improve recipes and reformulate products to meet the sugar threshold of less than five grammes per 100ml.
The sugar tax currently applies to a small range of F&N products, including the F&N Ranger Rimau Energy Drink, F&N Teh Tarik, and the Magnolia sterilised milk.
As detailed in Budget 2025, the government plans to increase the excise duty rate for sugar-sweetened beverages to 90 sen per litre next year, from 50 sen currently. The levy is imposed on ready-to-drink beverages containing more than five grammes of sugar per 100ml.
On Tuesday (Nov 5), F&N reported a slight 1.09% increase in net profit to RM542.77 million for the financial year ended Sept 30, 2024 (FY2024), from RM536.9 million the prior year, as revenue rose 5% to RM5.25 billion, from RM5 billion.
F&N’s share price was down by 16 sen or 0.5% to RM30.82 as at noon market break on Wednesday, bringing the group a market capitalisation of RM11.3 billion.