KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N), which is dealing with margin stress as a result of escalating uncooked materials prices, will solely elevate product costs as a final resort.
Chief government officer Lim Yew Hoe stated the group will take in the rising prices for so long as it may possibly afford to take action.
“For our monetary 12 months ended September 2021, the influence of commodity prices to us was greater than RM150mil. Elevating costs will probably be a final resort, as we all know customers’ pockets will not be actually full at the moment.
“So it’ll be on a delayed foundation. That means, we’ll get hit first after which see whether or not we are able to take in it. If not, solely then we’ll improve it and even when we do, it’ll be in a phased format,” he stated throughout a digital briefing yesterday.
Lim famous that palm oil costs had surged 100% in only one 12 months.
“After all we are able to’t improve our costs by 100%,” he stated, including that any worth will increase (if in any respect) could be accomplished step by step.
Individually, F&N chief monetary officer Lai Kah Shen stated the group had undertaken a number of cost-cutting measures to handle the commodity worth hike.
“Commodity prices had been greater than RM150mil however our revenue in 2021 was solely down by RM40mil.
“If we exclude the restructuring value, which was RM21mil throughout the monetary 12 months that simply handed, we have now really absorbed many of the value improve from commodities.
“So it exhibits the effectiveness of the measures that we’ve taken.”
Moreover, Lim stated the sugar tax hike introduced by the federal government in Finances 2022 final month can have little influence on the group.
“Most of our merchandise don’t fall inside this class, so the influence will probably be fairly small in contrast with different corporations.”
He added that F&N continues to be learning whether or not the Cukai Makmur or prosperity tax introduced below Finances 2022 will have an effect on the group.
“In the meanwhile, we’re nonetheless checking the small print to see if it is going to have an effect, particularly on abroad revenue. We nonetheless must be clear on whether or not the tax will have an effect on dividends we obtain from our operations in Thailand.”
The proposed prosperity tax will probably be imposed on corporations which have a pre-tax revenue of above RM100mil, whereby earnings above the RM100mil mark will probably be taxed at a fee of 33% as a substitute of the blanket 24% fee beforehand.
Lai stated the tax is relevant on a specific authorized entity, quite than on a gaggle foundation.
“In Malaysia, we do have a number of authorized entities and I don’t suppose that any have a rechargeable revenue that’s greater than RM100mil.
“Our concern will probably be extra on company tax exemption for international supply revenue. Thailand accounts for a giant chunk of earnings for the group and we do switch dividends to Malaysia.
“If that half is taxable, we can have some concern, so we’re awaiting extra particulars.”
On prospects for 2022, Lai is optimistic that the worldwide setting will enhance as international locations step by step open up their companies following extended interval of lockdown this 12 months.
“As each Malaysia and Thailand open up, we’re assured that we are able to promote extra, particularly the classes which were worst hit thus far, reminiscent of drinks.”
Revenue-wise, Lai admitted that there’ll nonetheless be some stress primarily as a result of larger commodity prices and international change (foreign exchange) adjustments.
“When it comes to foreign exchange, we’re not too involved, aside from the conversion. As for the transactional influence, we are able to hedge it and handle it effectively.
“However the conversion between the baht and the ringgit, that’s one thing that we have to monitor.”
Individually, Lim stated F&N is focusing on to develop its export income to RM1bil in 2022, in contrast with almost RM900mil in 2021.
“We hope to promote extra quantity in 2022, not promote the identical quantity however at the next worth as a result of rising commodity prices,” he stated.
F&N posted a web revenue of RM395.16mil for the monetary 12 months ended Sept 30, 2021, in contrast with RM410.38mil within the earlier 12 months.