KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N), which saw its net profit fall 32% to RM92.95mil in the first quarter ended Dec 31, 2021 (1Q22), expects the environment to remain challenging moving forward.

       “We expect that the environment will remain challenging moving forward due to continuing high prices of key raw and packaging materials and uncertainties arising from the Omicron variant of Covid-19.

       “As a very last resort, we may adjust product pricing gradually to ease margin pressures due to further increase in commodity prices and other input materials,” F&N said in the notes accompanying its financial results.

       The food and beverage group said it would continue to drive sales for the coming festive seasons and for the rest of the year, particularly for beverages and ready-to-drink dairy business, and out -of-home channels. Exports and the halal packaged food pillar will remain a key focus for the group.

       In 1Q22, F&N posted an increase of 2.2% in revenue to RM1.1bil from RM1.08bil a year ago, amidst recovery of economic activities in its core markets, although the positive momentum was disrupted when the recent floods inundated its manufacturing facilities in Shah Alam.

       Despite higher sales, the group’s pre-tax profit declined by 32%, at RM108.1mil from RM158.9mil a year ago, moderated by commodity price pressures, impact from the flood and forex translation loss from a weaker Thai Baht.

       Excluding the impact from the flood, group profit before tax declined by 17.2% to RM131.7mil.

       “Following the recent floods in December 2021, our manufacturing facilities in Shah Alam resumed operations in stages by mid-January. There are certain out-of-stock (OOS) situations for some products which had to be sacrificed to give priority to Chinese New Year products such as 100PLUS.

       “The OOS situation continues to be experienced in January and could only be resolved fully by the end of 2Q22.

       “Meanwhile, we will continue to engage our insurers to ascertain the quantum of reimbursement for property damage and loss of income under our business interruption policy,” F&N said.