F&N to maintain prices despite rising costs

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N), which sees its performance being very much dependent on material costs, will be maintaining the selling prices of its products at this point, despite rising input costs.

“When there is a cost increase, the first thing is we cannot increase the price, but to absorb it. After we absorb, we have to find ways to digest it,” said CEO Lim Yew Hoe at a media briefing yesterday.

Lim added that the company has embarked on a digesting process via internal cost cutting measures and increasing efficiency in selling and production process.

Nevertheless, Lim said the situation of a lower selling price on the back of rising material costs is “unhealthy”.

F&N CFO Tan Hock Beng said sugar prices, which have been escalating, is a short term challenge for the group, which requires the group to ensure that their prices remain competitive in a volatile market. Besides sugar, there is also an upswing in packaging and milk powder prices.

“Our packaging cost has been lowered partially because we have gone on a collaboration with our supplier of tin can to do a quarterly tender process for our tin plates, and that has resulted in very competitive tin plates prices,” Lim explained on the group’s measures to keep a lower packaging cost.

F&N is looking to grow its exports for both its Malaysian and Thai operations to RM800 million by 2020, of which RM500 million is the target export sales for Malaysia.

“The future belongs to exports. We believe that having Thailand and Malaysia plants together, we have the best assets we can truly exploit for the exports market.”

Currently, F&N’s exports account for less than 10% of the group’s half year revenue of RM2.08 billion.

The group’s focus is not only focused on “finished goods” but also “semi-finished” goods, which are custom made for producers based on their needs to cut their production process. However, Lim has ruled out diversifying into another product at the present time.

Moving forward, F&N hopes to expand the distribution points of all its products in its portfolio to 80,000 points by the end of its financial year in September.