Fraser & Neave Holdings Bhd Annual Report 2020

059 ANNUAL REPORT 2020 03 md&a Against a challenging backdrop, total exports from Malaysia and Thailand contributed RM796 million revenue to the Group this year, a noteworthy achievement in light of the pandemic. We would have overachieved our target Group export sales of RM800 million in FY2020 under normal circumstances.  F&B MALAYSIA Sustained demand for dairy products, boosted by in-home consumption, moderated the contraction in F&B Malaysia’s performance this year. Further aided by fourth-quarter domestic recovery and strong exports, revenue from our Malaysian operations declined moderately by 5.7 per cent from RM2.16 billion in FY2019 to RM2.04 billion during the period under review. Along with the lower revenue and higher input cost (mainly skimmed milk), operating profit for F&B Malaysia decreased by 10.0 per cent to RM144.9 million. Excluding the RM7.8 million gain on disposal of “TEAPOT” trademark to F&N Global Marketing Pte Limited, a direct wholly owned subsidiary of Fraser and Neave, Limited (F&NL) and effects of one-off and non-operating items in both years, F&B Malaysia operating profit declined by 16.8 per cent. F&B THAILAND F&B Thailand delivered a resilient full year performance attributed to successful tactical strategies as well as recovery in Indochina and export markets, which compensated the temporary contraction in general trade and foodservice channels due to the emergency decree. In FY2020, F&B Thailand posted revenue of RM1.94 billion, up by 1.8 per cent from RM1.91 billion in FY2019. Aided by favourable RM/THB forex translation, F&B Thailand’s operating profit improved 5.3 per cent (2.0 per cent in Thai Baht terms) to RM381.0 million due to prudent cost control over overheads and advertising and marketing spend. EXPORTS Against a challenging backdrop, total exports from Malaysia and Thailand contributed RM796 million revenue to the Group this year, a noteworthy achievement in light of the pandemic. We would have overachieved our target Group export sales of RM800 million in FY2020 under normal circumstances. Exports from Malaysia grew by double-digit driven by more robust sales to the Middle East and Africa, and ASEAN markets. Our focus on halal markets is already bearing fruit, as evidenced by revenue from halal markets exceeding the RM100 million target. Indochina markets (managed by F&B Thailand) also performed strongly this year with Cambodia and Laos collectively contributing over RM200 million in revenue, driven by successful expansion of distribution and reach. Today, TEAPOT is the market-leading brand in condensed milk market in both Cambodia and Laos. Exports accounted for 20 per cent of the Group’s total revenue in FY2020, up from 18 per cent in FY2019. This was aided by further expansion of our markets, which now comprise 82 countries. In December 2019, we achieved a milestone with the incorporation of Fraser and Neave MENA DWC-LLC, our first international office, in Dubai, which will serve as a strategic base to develop opportunities in the Middle East and North Africa (MENA) regions. New? 1.  Carnation Plus SCM 0% Fat, 25% Reduced Sugar 2. TEAPOT Squeeze Tube – Matcha, Mango 3. Magnolia Milkies Tablet – Classic Malt, Hokkaido Milk, Strawberry Yogurt 3 1 2 3 3