Fraser & Neave Holdings Bhd (F&N) expects business to remain challenging in the 2nd half of 2022 amidst volatile commodity prices, but it remains cautiously optimistic on the demand for its products, thanks to the relaxation of COVID-19 restrictions in Malaysia and Thailand.
Group Finance Director Tiong Yean Yau said the company has taken aggressive cost control measures in the expectation of surging commodity prices like palm oil as well as rising energy costs. F&N is likely to raise the prices of its consumer products, as the cost of goods sold in 1st half of 2022 is already up by RM200 million (US$45.6 million).
F&N CEO Lim Yew Hoe however said, “One thing we can promise with certainty is that the price increase will always lag behind the cost increase.”
Meanwhile, in terms of capital expenditure, F&N has invested in a new liquid milk and plant-based beverages factory in Thailand, which is in the final stages of commissioning. The plant will have a production capacity of 50 million litres and the company hopes to expand its portfolio with liquid fresh milk and plant-based beverage products. Concurrently, F&N is also equipping its Pulau Indah plant in Klang, Malaysia with plant-based beverages capability by the end of 2022.
Both investments amounting to RM148 million (US$33.8 million) represent F&N strategic shift to reduce reliance on condensed milk business and enable it to grow its brand in the liquid milk segment.
