KUALA LUMPUR, May 3 — Fraser & Neave Holdings Bhd (F&N) anticipates challenges from the rising cost of raw materials such as sugar, rice, gelatine and cocoa powder and has devised strategies to minimise its impact.
Chief financial officer Tiong Yean Yau said the company is also “mindful” of the different issues in the market currently, especially geopolitical issues and inflationary pressures.
“In terms of cost, what we have done is commodity hedging against orders. We manage cost to minimise the impact,” he said at F&N’s 2024 half-year financial results briefing today.
Earlier, chief executive officer Lim Yew Hoe said prices of most commodities have stabilised except for cocoa powder, gelatine, tinplate, palm oil, white rice and sugar which remain high in 2024.
He noted that as of February 2024, the prices of gelatine surged to US$8,370 (RM39,670) per metric tonne (MT), cocoa powder soared to RM16,450 MT, sugar increased to RM3,195 MT while white rice rose to RM3,700 MT.
The food and beverage company was impacted by about RM5 million due to the higher price of gelatine, Lim said.
“The high cost of gelatine will hit us the most. The good news is that we probably have a bit more inventory because we bought more of it last year. When the inventory runs out next year, we will be even more (impacted),” he said, adding that the ingredient is highly used in its Cocoaland brand of products.
The group was also impacted by between RM3 million and RM4 million a year from the higher price of cocoa powder, about RM60 million from higher sugar prices and RM5 million due to the rising cost of rice. — Bernama
