Where there is food, there are drinks—be it a can of fizzy cola, alcohol, or something with a more local flavour, like green tea. These canned drinks are typically found in local restaurants, coffee shops, supermarkets and convenience stores, making them easily accessible for all.
Local players Yeo Hiap Seng Y03 (Yeo’s) and Fraser & Neave (F&N) are household names, with Singaporeans familiar with their signature canned or bottled drinks. While the two companies are listed here, their footprint goes beyond Singapore and can be found in most countries in the region.
As of August 14, Yeo Hiap Seng’s share price was 52 cents, and its market cap was 324.7 million. The company has been affected by economic uncertainties, which have resulted in cautious consumer sentiment. It has also been affected by the volatility of regional currencies like the Indonesian rupiah and the Malaysian ringgit.
In its latest 1HFY2024 ended June, Yeo Hiap Seng’s earnings came in at $3.2 million, 3.8% lower y-o-y, as revenue declined by 8.7% y-o-y to $165.3 million, mainly due to the movements in foreign exchange rates and lower sales volume of non-Yeo’s core revenue.
Excluding foreign currency translation, core Yeo’s revenue remained relatively unchanged, with sales growth in Malaysia and Singapore offsetting weaker demand in other markets. Core Yeo’s revenue would have done better if not for freight disruption to some of the group’s markets.
Management says it remains focused on executing the group’s brand strategy with refreshed and new initiatives. Management is also expanding its internal capabilities by upgrading the group’s IT systems. These initiatives are aimed at strengthening the group’s business foundation to achieve higher growth and create sustainable value for customers and shareholders.
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Based on current trends, Yeo Hiap Seng’s management expects results for the rest of the year to remain satisfactory.
The most exciting development for F&N, which has a larger market capitalisation of $1.76 billion, is a proposed share swap between its major shareholders TCC Assets and Thai Beverage Y92 (ThaiBev). TCC Assets will transfer a 41.3% stake in F&N to ThaiBev while ThaiBev will transfer its 28.78% stake in Frasers Property TQ5 (FPL) to TCC Assets. After the share swap, TCC Assets will own 17.6% of F&N and 86.89% of FPL. F&N is being transferred into ThaiBev at $3.55 per F&N share compared to its share price of $1.21 as at Aug 14.
In 1HFY2024 ended June 30, F&N’s earnings rose 52.5% y-o-y at $83.8 million while revenue was 2.5% higher y-o-y at $1.07 billion.
The beverages segment, comprising beer and soft drinks, saw a 6% y-o-y increase in revenue, driven primarily by favourable sales mix and higher volume resulting from the successful execution of festive campaigns. Dairies recorded 3% growth, buoyed by robust export and domestic canned milk volumes across core markets, despite unfavourable forex translation. Combined, F&B revenue grew 4% y-o-y to $929.8 million. Excluding adverse forex translation, F&B revenue improved 8% in 1HFY2024.
The group had cited unfavourable foreign exchange translation rates as a challenge during this period.
However, the group’s first-half performance was impacted by lower revenue in the publishing & printing segment, decreasing by 14% y-o-y to $96.5 million, due to reduced print orders and the closure of unprofitable business units.
Hui Choon Kit, CEO of F&N, says: “As we traverse this volatile and inflationary environment, our focus remains on driving growth across all business units and markets we operate in, prioritising productivity improvements and effectively managing forex and input cost challenges.”
