SINGAPORE (Feb 27): Yeo Hiap Seng has announced earnings of $1.8 million for the 4Q ended Dec 2018, up 20% from 4Q17 earnings of $1.5 million due to better margins as well as lower fair value losses on equity investments.

The bottomline improvement came despite a 6.1% y-o-y revenue decline to $79.2 million compared to $84 million a year ago due to lower sales in Malaysia, which nonetheless registered an improved gross margin for the quarter.

Overall, the F&B division recorded $0.5 million higher segment profit due to higher other gains, which came largely on the back of improvement in currency translation.

The group also recorded lower net fair value losses on equity investments and higher interest income.

Yeo Hiap Seng’s latest set of 4Q results brings earnings for FY18 to $12 million, down 91.8% from its FY17 earnings of $145.7 million in the absence of a $138.4 million one-off gain on disposal of the group’s investment in Super Group.

Notwithstanding this exceptional item, the group’s earnings of $12 million would have increased by $4.7 million or 64.4% from $7.3 million in FY17, due to higher net profit generated from the F&B division; higher net fair value gains on equity investments; and higher interest income.

As at end-Dec 2018, cash and cash equivalents were down at $282.7 million from $293.8 million a year ago, after accounting for dividend payouts and payments for the purchase of property, plant and equipment.

The group has proposed a final cash dividend of 2 cents, as well as a one-time special dividend of 2 cents.

In its outlook, Yeo Hiap Seng says it expects F&B margins to remain under pressure from weak consumption outlook for its key markets, exacerbated by competitive selling prices and raw material price fluctuations.

The group intends to continue growing its sales by rejuvenating its brand, growing its food business, and developing its agency business as it expands its product offerings.

As for Malaysia’s Budget 2019 announcement that an excise tax of RM40 cents per litre will be imposed on sweetened beverages starting from April 1 this year, Yeo Hiap Seng says it has taken “appropriate actions to mitigate the effects” of this tax, and any other proposed tax changes that may affect it on a group level.

Shares in Yeo Hiap Seng closed 1 cent lower at 94 cents on Wednesday.