SINGAPORE (Nov 8): Fraser and Neave (F&N) saw FY17 earnings soar to $1.3 billion compared to $108 million the year before led by fair value adjustment and exceptional items of $1.2 billion, which arose largely from the realisation of fair value adjustment reserve upon change of interests in Vinamilk.

Excluding fair value adjustment and exceptional items, FY17 earnings fell 8.3% y-o-y to nearly $100 million, mainly due to higher finance cost due to borrowings to finance the acquisition of Vinamilk shares, along with weaker Beverages and concentrate sales and higher marketing expenses.

Full-year revenue fell 4.1% to $1.9 trillion from $2 trillion in the previous year due to a surge in revenue from Dairies Thailand on the back of strong sales performance, as well as a significant increase in revenue from Vinamilk.

This was however offset in part by losses in the beverages segment, which arose largely from lower revenue and rising input costs, continuing weak consumer sentiments and increasing competitive environment in Malaysia, as well as brand investments in new markets.

Profitability from the Food & Beverage (F&B) division grew 7% to $204 million from $190 million the year before.

Meanwhile, revenue from the Printing & Publishing division fell 5% to $293 million due to a decline in textbook sales and advertising income from Publishing, coupled with lower book volume sales due to a weak Christmas season and poor trade book retail sentiment.

F&N says that in spite of the lower revenue, the segment managed to narrow its losses to $4.5 million compared to $5.2 million in FY16 due to group-wide continuous cost containment efforts and benefits of cost rationalisation measures which offset the decline in revenue margin contribution.

It adds that print, in particular, was back to profitability after a few years of losses.

Taking into consideration the anticipated working capital requirement in the coming year, F&N’s board of directors has proposed a final dividend of 3 cents per share.

Together with the interim dividend of 1.5 cents per share paid in June 2016, this brings the total dividend for the full year to 4.5 cents, unchanged from that of FY16.

“Notwithstanding the challenging business environment, F&N remained resilient, continued to deliver creditable performance, and defended our leading market positions in our core beverage categories,” says Koh Poh Tiong, chairman of the F&N board executive committee on the group’s performance over FY17.

“This is possible because of our singular focus on executing our business strategies well - building our brands, and bringing healthy, innovative products to our loyal consumers in the marketplace. Together with our size, scale and distribution capabilities, our brands will continue to provide F&N with the solid foundation and capabilities for continued success,” he adds.

Shares in F&N closed 2 cents lower at $2.53 on Wednesday.