Complete Property Market Updates of Singapore

June 4, 2008

Property key driver as F&N H1 net profit rises 11.7%

Filed under: Developer News,Financing,General — Propertymarketupdates @ 4:11 am

Group looks to grow other business segments; second-quarter net earnings fall 9.8%

THE property segment was the key profit driver for Fraser & Neave (F&N) in the first half of its financial year. But that may change in future as the group looks to grow other business segments, with action likely to occur on the food and beverage (F&B) front.

F&N yesterday reported net earnings of $96.6 million for the second quarter ended March 31, 2008, 9.8 per cent down from $107.1 million in Q2 2007.

But for the six months to March 31, net earnings rose 11.7 per cent to $205.2 million, from $183.7 million in the corresponding period last year. This came on the back of a 12 per cent increase in revenue for H1 2008, to $2.46 billion from $2.20 billion in the year-ago period.

Earnings per share for H1 2008 was 14.8 cents, up 2 cents. Interim dividend remained at five cents per share.

H1 profit before interest, taxation and exceptional items rose 10 per cent to $406 million. The property segment took up the largest share of this, at $224.8 million or 55 per cent.

Describing F&N’s strategy going forward, group company secretary Anthony Cheong said: ‘From the viewpoint of balancing the portfolio of our businesses, there is that intention to increase the contribution from our other businesses so that there is less reliance on the profits of property.’

‘One way of achieving a great leap must be through mergers and acquisitions (M&As),’ Mr Cheong also said. And asked if M&As would occur in the F&B industry, Mr Cheong replied: ‘Yes we are looking at M&As in the F&B industry.’

According to F&N, its newly-acquired Nestle business, stronger soft drinks sales, improved performance by Frasers Hospitality, and higher rental income from its commercial property division also led to profit improvement.

In the group’s press release, chairman Lee Hsien Yang said: ‘Our strong half-year results demonstrated the resilience of F&N’s portfolio of businesses.’

Mr Lee also noted that ‘while the global economic outlook is now less certain, the weaker market presents excellent opportunities for F&N to make investments at more reasonable values’.

F&N’s ongoing search for a CEO was also discussed at yesterday’s results briefing. Speaking to reporters, Mr Cheong mentioned that finding a suitable candidate remained a priority for the group, because in the long term, ‘you cannot have a driverless train’.

In response to continuing market talk that F&N’s business may be split in future, Mr Cheong reiterated the stand that there were no plans to break the group up at the moment.

Shares of F&N closed at $4.92 yesterday, three cents up.

Source : Business Times – 10 May 2008

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