The SGD$1.2m ($846,000) increase, as compared with the corresponding quarter last year, was attributed to contribution from the vending business acquired in July 2016, as well as revenue growth in its Dairies Thailand division and the new markets of Myanmar and Vietnam.
For the period under review, the Group registered an 8% year-on-year increase in operating expenses, mainly associated with a rise in distribution costs.
Coupled with continued brand investment costs in the new markets of Indonesia, Myanmar, Thailand and Vietnam, and negative foreign exchange effects, F&N’s 1Q2017 profit before interest and taxation dropped 14% to SGD$46.4m ($32.7m).
Consequently, profit after taxation fell 15%, to SGD$40.5m ($28.5m).
Revenue grew 2% on the back of increased distribution coverage, contribution from new UHT milk products and a favorable exchange rate.
In spite of moderate revenue growth and the absence of a one-off cost recovery recorded in 1Q2016, Dairies Thailand 1Q2017 earnings jumped 16% (+12% in constant currency) to SGD$25.3m ($17.8m), aided mainly by favorable input costs and a weaker Singapore dollar.
Dairies Thailand’s PBIT growth offset weaker performances in Dairies Malaysia and Dairies Singapore to power the overall 5% increase to SGD$39.4m ($27.8m) in Dairies 1Q2017 PBIT.
Dairies Malaysia 1Q2017 revenue decreased 4%. Impacted by the rise in raw material costs, particularly in sugar, coupled with higher trade and consumer promotion spending, Dairies Malaysia 1Q2017 earnings declined 7% (-5% in constant currency) to SGD$13.1m ($9.2m).
Aided by an increase in export volume and the strong performance of soya and yogurt products in the domestic market, Dairies Singapore 1Q2017 revenue increased 3%. However, intensified competition and higher operational costs adversely impacted Dairies Singapore 1Q2017 earnings by 42%.
Strengthening in Vietnam
On December 21, 2016, F&N completed its acquisition of additional shares representing approximately 5.4% interest in Vietnam Dairy Products Joint Stock Company (Vinamilk) through a competitive bid process.
In addition to a series of open market purchases in January 2017, to date, the Group has raised its shareholding in Vinamilk to 17.5%.