45
F&NHB INVESTOR 14 August 2018 OPEN DAY
F&NHB INVESTOR
14 August 2018
OPEN DAY
Important noticeCertain statements in this Presentation constitute “forward-looking statements”, including forward-looking financialinformation. Such forward looking statements and financial information involve known and unknown risks,uncertainties and other factors which may cause the actual results, performance or achievements of Fraser & NeaveHoldings Bhd (“F&NHB”), or industry results, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding F&NHB’s present andfuture business strategies and the environment in which F&NHB will operate in the future. Because these statementsand financial information reflect F&NHB’s current views concerning future events, these statements and financialinformation necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materiallyfrom these forward-looking statements and financial information.
F&NHB expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement or financial information contained in this Presentation to reflect any change in F&NHB’s expectationswith regard there to or any change in events, conditions or circumstances on which any such statement or informationis based, subject to compliance with all applicable laws and regulations and/or the Bursa Malaysia Securities BerhadListing Requirements and/or any other regulatory or supervisory body or agency.
This Presentation includes market and industry data and forecast that have been obtained from internal survey, reportsand studies, where appropriate, as well as market research, publicly available information and industry publications.Industry publications, surveys and forecasts generally state that the information they contain has been obtained fromsources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such includedinformation. While F&NHB has taken reasonable steps to ensure that the information is extracted accurately and in itsproper context, F&NHB has not independently verified any of the data from third party sources or ascertained theunderlying economic assumptions relied upon therein.
Important noticeTRANSFORMING
FOR ASUSTAINABLE FUTURE
As part of a transformation program,
F&N has been undertaking
reconstruction plans to build
a stronger F&N for the future
since end-2015.
Transforming F&N into the No. 1 Total Beverages Company
OUR HERITAGE
OUR PEOPLE
To transform F&N to be the undisputedNo.1 Total Beverage Company in Malaysia
by 2020
Our brands are the undisputed No. 1 in all the categories that we compete in.
We are the No. 1 or Best-in-Class player within our marketplace in terms of Cost Efficiency and Productivity.
We are the Employer of Choice within our industry.
What do we mean by No.1 total beverage
company?
Bringing together the
combined strengths
OUR BRANDS
FRASER & NEAVE HOLDINGS BHD
F&NHB Today
F&NHB Group Today:THREE Growth Pillars Supporting Sustainability
TODAY
F&B
Malaysia
F&B
Thailand
Exports
Our current business is built upon
three independent growth pillars:
▪ F&B Malaysia (Domestic)
▪ F&B Thailand and
▪ Exports
Each pillar has its own long-term strategies
and targets.
* Exports is included within F&B Malaysia & F&B Thailand segments.
F&NHB Group Today:Commercial Alignment & Enhanced Operational Efficiency in Malaysia
* Exports is included within F&B Malaysia & F&B Thailand segments.
Extracting
synergies with
the commercial
realignment
Deepening and widening our market penetration by transforming the route-to-market,intensifying focus on enhancing its efficiencies and reducing cost-to-serve
600bpm water line, Shah Alam
Sweetened condensed milk pouch & tube filling
line, RojanaCombi blow, mould & filling
machine,Shah Alam
Debottlenecking programme at dairy plant in Pulau Indah
Mineral water plant expansion, Bentong
Cold aseptic PET line &warehouse, Shah Alam
F&NHB Group Today:> RM 500 million invested over a 3-year period
to increase capacity and build our capabilities
Commenced producing
100PLUS ACTIVE 1 litrepack since March 2018.
Mineral water plant expansion, BentongCompleted in May 2018
Mineral water plant expansion, BentongCompleted in May 2018
Drinking water plant expansion, Shah AlamCompleted in April 2018
F&NHB Group Today:Building foundation & gaining traction in our Export business
F&B
MalaysiaF&B
Thailand
F&B
Malaysia
F&B
Thailand
Exports
Exports
FUTURE
NOW
Export ex-F&B Malaysia & ex-F&B Thailand
to reach RM 800 mil by 2020
OUR TARGET
Building Exports as Our Third Pillar
Growth for F&B Malaysia exports in YTD Q3
FY 201820%
Growth for F&B Thailand exports in YTD Q3
FY 201810%
Double-digit growth in exports for both Malaysia & Thailand
Contribution of total exports to YTD Q3 FY 2018
Group revenue16%
Contribution of total exports to YTD Q3 FY 2018
Group operating profit15%
FRASER & NEAVE HOLDINGS BHD
Quarter 3 FY 2018Group Financial Performance
Quarter 3 FY 2018 F&NHB Group Financial Highlights
▪ Revenue declined marginally by 1.1% due to lower revenue contribution from both Thailand
and Malaysia domestic operations bolstered by double-digit exports growth.
▪ Positive contribution to profits from both Malaysian and Thai operations.
Financial HighlightsQ3
2017/2018
Q3
2016/2017Change
Revenue (RM million) 1,029.7 1,041.3 -1.1%
Operating profit (RM million) 106.8 71.3 49.8%
Profit before tax (RM million) 107.0 73.5 45.6%
Profit after tax (RM million) 104.5 69.4 50.6%
Basic earnings per share (sen) 28.5 18.9 50.8%
Quarter 3 FY 2018 Revenue ▪ F&B Malaysia revenue grew marginally by 0.3%, affected by lower consumer spending and slower off-take
post Hari Raya festive season, offset by double digit growth in exports.▪ F&B Thailand revenue declined by 2.9% impacted by continuing challenging domestic market conditions
exacerbated by intensive price competition; and partly mitigated by higher export sales.
\
592,4
51
448,5
50
178
98
1,0
41,2
77
594,0
61
435,4
13
209
64
1,0
29,7
47
F&B Malaysia F&B Thailand Property Others Total
Q3 FY 2017 Q3 FY 2018
-2.9%
nm
-1.1%
0.3%
nm
Revenue in THB terms
decreased by 2%
56.9%
43.1%
57.7%
42.3%
Revenue F&B Malaysia : F&B Thailand (%)
Revenue Q3 FY 2018by Business Segment (RM’000)
F&BThailand
F&BMalaysia
F&BMalaysia
F&BThailand
Q3 FY 2018
Q3 FY 2017
nm - not material
Quarter 3 FY 2018 Operating Profit Malaysian operations benefitted from operational cost savings, lower overheads and favourable
sugar costs whilst the Thai operations gained from favourable input and packaging costs.
24,2
17 5
1,5
48
237
2,2
48
71,2
99
49,1
15
57,4
14
151
342
106,8
38
F&B Malaysia F&B Thailand Property Others Total **
Q3 FY 2017 Q3 FY 2018
nmnm
49.8%
11.4%102.8%
Operating profit in THB terms increased by
7.9%
32.0%
68.0%
46.1%
53.9%
Operating ProfitF&B Malaysia : F&B Thailand (%)
Operating Profit Q3 FY 2018by Business Segment (RM'000)
F&BThailand
F&BMalaysia
F&BMalaysia
F&BThailand
Q3 FY 2018
Q3 FY 2017nm - not material** Adjustments and eliminations are not shown in the chartN1 - restructuring costs in Q3 FY 2017
Excluding one-off items 45.2% (N1)
FRASER & NEAVE HOLDINGS BHD
YTD Q3 FY 2018Group Financial Performance
YTD Q3 FY 2018 F&NHB Group Financial Highlights
▪ Revenue maintained at RM3.1 billion - continued exports growth mitigated the challenging
domestic market conditions for both the Malaysian and Thai operations.
▪ The improvement in Q3 PBT from favourable sugar input costs helped negate the impact of higher
input and packaging costs in the first half year (1st half year: PBT declined by -17.2%)
▪ PAT maintained at RM303 million.
Financial HighlightsYTD Q3
2017/2018
YTD Q3
2016/2017Change
Revenue (RM million) 3,113.2 3,125.1 -0.4%
Operating profit (RM million) 321.6 325.8 -1.3%
Profit before tax (RM million) 323.1 334.3 -3.4%
Profit after tax (RM million) 303.9 303.7 0.1%
Basic earnings per share (sen) 82.8 82.9 -0.1%
YTD Q3 FY 2018 Revenue maintained at RM3.1 billion
\
1,7
83,4
69
1,3
40,7
54
542
334
3,1
25,0
99
1,7
76,2
66
1,3
36,1
05
654
194
3,1
13,2
19
F&B Malaysia F&B Thailand Property Others Total
YTD Q3 FY 2017 YTD Q3 FY 2018
-0.4%
-0.3%
nm
-0.4%
nm
57.1%
42.9%
57.1%
42.9%
Revenue F&B Malaysia : F&B Thailand (%)
Revenue YTD Q3 FY 2018by Business Segment (RM’000)
F&BThailand
F&BMalaysia
F&BMalaysia
F&BThailand
YTD Q3 FY 2018
YTD Q3 FY 2017
nm - not material
Revenue in THB terms
increased by 0.3%
YTD Q3 FY 2018 Operating Profit Marginal decline of 1.3%, an improvement from the decline of 15.6%
recorded in the first half year.
132,1
74 196,3
59
784
6,2
72
325,7
61
130,1
90 196,2
96
626
321,5
59
F&B Malaysia F&B Thailand Property Others Total **
YTD Q3 FY 2017 YTD Q3 FY 2018
-1.5%
nm
-1.3%
nm
0%
40.2%
59.8%
39.9%60.1%
Operating ProfitF&B Malaysia : F&B Thailand (%)
Operating Profit YTD Q3 FY 2018by Business Segment (RM'000)
F&BThailand
F&BMalaysia
F&BMalaysia
F&BThailand
YTD Q3 FY 2018
YTD Q3 FY 2017
Operating profit in THB terms increased by
0.8%
nm - not material** Adjustments and eliminations are not shown in the chartN1 - reversal of restructuring costs in YTD Q3 FY 2018 and restructuring costs in YTD Q3 FY 2017
N2 - Provision for inventories damaged by fire in YTD Q3 FY 2018
Excluding one-off items-15.4% (N1)
Excluding one-off items+1.5% (N2)
FRASER & NEAVE HOLDINGS BHD
F&B Malaysia
F&B MalaysiaQ3 revenue affected by slower off-take and lower consumer spending
post Hari Raye festive season, bolstered by double digit growth in exports whilst operating profit improved from lower overheads, and favourable sugar input costs
Revenue
(RM’000)Operating profit
(RM’000)
59
2,4
51
59
4,0
61
FY 2017 FY 2018
24
,21
7 4
9,1
15
FY 2017 FY 2018
▪ Q3 revenue : on par with corresponding quarter, with a marginal growth of 0.3% (from RM592.5million to RM594.1 million)
▪ consumer spending was lower and off-take was slow post Hari Raya festive season.
▪ offset by double digit growth in exports.
▪ Q3 operating profit : improved significantly by 102.8% from RM24.2 million to RM49.1 million
▪ operational cost savings and lower overheads (There were restructuring costs amounting to
RM9.6 million in the corresponding quarter).
▪ favourable input cost for sugar for the quarter compared to corresponding quarter while other
dairy-based input and packaging material costs are on the rise.
▪ partly offset by higher advertising and promotions expenditure for the festive season.
102.8%0.3%
60
,35
1
41
,16
2
47
,60
6
39
,91
3
24
,21
7
49
,11
5
13
2,1
74
13
0,1
90
Q1FY17
Q1FY18
Q2FY17
Q2FY18
Q3FY17
Q3FY18
YTDQ3
FY17
YTDQ3
FY18
Operating profit (RM '000)
-31.8%
-1.5%
-16.2% +102.8%
64
7,0
82
60
0,4
05
54
3,9
36
58
1,8
00
59
2,4
51
59
4,0
61
1,7
83
,46
9
1,7
76
,26
6
Q1FY17
Q1FY18
Q2FY17
Q2FY18
Q3FY17
Q3FY18
YTDQ3
FY17
YTDQ3
FY18
Revenue (RM '000)
-7.2%
-0.4%
+7.0% +0.3%
F&B MalaysiaDouble-digit growth in exports mitigated the decline in domestic market
caused by market contraction in the beverages product categories in Malaysia. Operating profit improved from first half year with strong Q3 operating profit performance.
YTD revenue : -0.4% from RM1,783.5 million to RM1,776.3
million
▪ market contraction in the beverages product categories in
Malaysia.
▪ floods in peninsular Malaysia and Sabah in the 1st quarter.
▪ mitigated by the double-digit growth in exports.
YTD operating profit : -1.5% from RM132.2 million to RM130.2
million. The decline has narrowed from -24.9% for the 1st half year.
▪ operational cost savings and lower overheads (restructuring
costs amounting to RM17.1 million in YTD Q3 FY 2017).
▪ favourable input cost for sugar and partially offset by higher
costs for other dairy-based input and packaging material costs.
▪ partly offset by unfavourable foreign currency impact from
volatile MYR/US Dollar which affected the exports revenue.
▪ higher advertising and promotions expenditure.
FRASER & NEAVE HOLDINGS BHD
F&B Thailand
F&B ThailandQ3 revenue impacted by continuing challenging domestic market conditions
bolstered by higher export sales. Operating profit grew on the back of favourable input and packaging material costs.
▪ Q3 revenue : declined by 2.9% from RM448.6 million to RM435.4 million
▪ continuing challenging domestic market conditions exacerbated by intense price
competition.
▪ partly mitigated by higher export sales.
▪ Q3 operating profit : improved by 11.4% from RM51.5 million to RM57.4 million
▪ favourable input and packaging material costs for the quarter.
Revenue
(RM’000)
Operating profit
(RM’000)
-2.9% 11.4%
Operating profit
in THB terms
increased by
7.9%
Revenue in
THB terms
increased by
2%
44
8,5
50
43
5,4
13
FY 2017 FY 2018
51
,54
8
57
,41
4
FY 2017 FY 2018
78
,05
0
72
,71
0
66
,76
1
66
,17
2
51
,54
8
57
,41
4
19
6,3
59
19
6,2
96
Q1FY17
Q1FY18
Q2FY17
Q2FY18
Q3FY17
Q3FY18
YTDQ3
FY17
YTDQ3
FY18
Operating profit (RM '000)
-0.9%
-6.8%
+11.4%
nm
44
3,7
01
46
8,2
36
44
8,5
03
43
2,4
56
44
8,5
50
43
5,4
13
1,3
40
,75
4
1,3
36
,10
5
Q1FY17
Q1FY18
Q2FY17
Q2FY18
Q3FY17
Q3FY18
YTDQ3
FY17
YTDQ3
FY18
Revenue (RM '000)
-3.6%
-0.3%
+5.5% -2.9%
F&B ThailandDouble-digit growth in exports to Indochina region mitigated the impact of
challenging domestic landscape due to intensifying competition. Operating profit recovered in Q3 with 11.4% growth on the back of favourable input and packaging costs.
YTD operating profit : flat at RM196m, an improvement
from a decline of 4.1% for the 1st half year.
▪ favourable input and packaging material costs for the quarter.
YTD revenue : eased marginally by 0.3% from RM1,340.8
million to RM1,336.1 million
▪ Double-digit growth in exports to Indochina region
mitigated the impact of challenging domestic landscape
due to intensifying competition; and
▪ Loss of UHT milk revenue caused by product shortage
resulting from a co-manufacturer’s plant that was damaged
by fire in November 2017 (sale of UHT products
recommenced in May 2018).
12.0 12.6 12.8 16.5 20.0 20.0 20.0 22.0 22.0 27.0 27.0 27.0
22.2 22.5 24.0
38.0
47.0
23.0 30.0
33.0 35.5 30.5 30.5
5.0 5.0
110.0
30.0
15.0 10.0
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
30.0
32.0
34.0
36.0
38.0
40.0
42.0
-
20
40
60
80
100
120
140
160
180
200
9/30/2007 9/30/2008 9/30/2009 9/30/2010 9/30/2011 9/30/2012 9/30/2013 9/30/2014 9/30/2015 9/30/2016 9/30/2017 9/30/2018
F&N
HB
Sh
are
pri
ce (R
M)
Div
iden
d (s
en)Special dividend
Final dividend
Interim div idend
Share price
Divestment of glass business
Capital gains on sale of Section 13
land
Coke break
Flood inundated
Rojana plant Transformation
in actionRM8.05(2 Oct 2007)
> 450%
If an investor holds F&NHB shares from 2007
until today*, the ROI earned (share price
appreciation + dividends) would be
* RM37.74(10 August 2018) Market
capitalisationRM13.8 billion
RM37.74 – RM8.05 + RM7.50 (Dividends)
= RM37.19
Shareholders’ Wealth
FRASER & NEAVE HOLDINGS BHD
What are we busy with?
Our Key Focus Areas
Forging Ahead for the Future
CAPACITY & CAPABILITY BUILDING
COST OPTIMISATION
CONSUMER-FOCUSED INNOVATION
Getting F&N Future Ready
Capacity & Capability Building
CAPACITY & CAPABILITY BUILDING
COST OPTIMISATION
CONSUMER-FOCUSED INNOVATION
• Increase our production and warehousing capacity, broaden our capabilities, and shorten our route to the different markets we serve
• Invest for future
• Increase capacity not just in volume but also in packaging format expansion
• Support our strategic intent to win in Export
Gearing Up for Sustainable Growth & Cost Efficiency
Over RM500
million capex
over 3 years
Enhance our
innovative and
competitive
abilities
Greater
capacity for
economies of
scale
Optimise
logistics
movement and
reduce our
carbon footprint
Increase our production
and warehousing
capacity, broaden our
capabilities, and shorten
our route to the different
markets we serve
New Aseptic Cold-Filling Polyethylene Terephthalate (PET) line at the Shah Alam plant
further accelerate F&NHB’s expansion into new offerings in the near future
Commenced producing
100PLUS ACTIVE 1 litrepack since March 2018.
Commenced producing
tea products since June 2018.
New Aseptic Cold-Filling Polyethylene Terephthalate (PET) line at the Shah Alam plant
further accelerate F&NHB’s expansion into new offerings in the near future
▪ Longer product shelf life ▪ Less flavour loss ▪ Flexibility in bottle design▪ Reduce usage of PET resin packaging material
ASEPTIC COLD-
FILLING PET LINE
Cost Optimisation
▪ In-sourcing, to improve our cost efficiency and achieve better quality control by reducing dependency on external suppliers eg.▪ Can-making lines in Pulau Indah▪ Water line and UHT line in Shah Alam▪ Aseptic cold-filling PET line and
integrated warehouse in Shah Alam
▪ For completed capex, we ensure that our asset utilisation is good
▪ Evaluate processes to create better efficiency and cost reduction for economies of scale
Consumer-Focused Innovation
▪ Offering healthier options▪ Differentiation in packaging
format catering to the different occasion and needs of our consumers
▪ Growing into adjacent categories eg. spread, beverage condiment
WHAT’S NEW?PRODUCT INNOVATIONS to drive growth, take care of sugar
agenda and address affordability issue
100PLUS Full Range now with Healthier Choice Logo
WHAT’S NEW?
2.5 kg pouch
TEAPOT Squeeze Tube
CARNATION PLUS
TEAPOT EXTRA
20 kg bag
Stick Pack
Differentiation in packaging format
catering to the different needs of our consumers
FRASER & NEAVE HOLDINGS BHD
F&NHB: Forging Ahead for the Future
FY2018Business Outlook
▪ Business environment in Thailand will continue to be challenging with intensifying
competitive price pressure.
▪ In Malaysia, the management will monitor the impact of the reintroduction of the sales
and services tax on 1 September 2018 on the pricing of the products.
▪ Raw and packaging material prices in subsequent quarters are expected to remain volatile:
▪ uptrends in packaging and milk-based commodity prices
▪ compounded by the high level of oil prices.
The Group has hedged its core commodity requirements for the financial year along with the
corresponding foreign currency exposure wherever possible.
▪ Operational cost savings from the transformation initiatives and efficiency through
process improvement are expected to continue to contribute positively to the Malaysian
operations in the coming quarter.
▪ Board and management will continue to remain vigilant and take decisive actions in
managing the changes in external environment to ensure sustainable growth for our
business.
Forging ahead as we believe the condition
will turn
• CAPEX projects coming to fruition in stages –
provide capacity to fuel export growth. We will
continue to invest ahead of the curve. More
capex to come.
Continued focus on product and packaging
innovation to drive growth
• New products to be launched in MY
and TH next year
• Custom-mass product for export
market (eg. develop more customised
application)
FORGING AHEAD FOR THE FUTURE
Greater competitiveness with World-class
manufacturing
• Drive operational cost savings and efficiency through
process improvement to truly be World class in our
manufacturing– high quality, high productivity, lowest
cost in our industry
Continue the discipline of balancing growth and
profitability
• We are not afraid of short-term impact for
long-term sustainability.
• Now that operations are back to normal and
stabilised, we will take quick and bold decisions.
FORGING AHEAD FOR THE FUTURE
FRASER & NEAVE HOLDINGS BHD
05THANK YOU
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