F&N to invest RM32.89m to expand in Thailand

An employee works inside a money exchange centre in Kuala Lumpur. — Reuters pic
An employee works inside a money exchange centre in Kuala Lumpur. — Reuters pic

KUALA LUMPUR, Jan 20 — Fraser & Neave Holdings Bhd (F&N) has set aside 300 million baht (RM32.89 million) in capital expenditure (capex) to support the double-digit revenue growth of its Thai dairy division.

 

Chief executive officer, Lim Yew Hoe, said the amount would be used to expand the company’s production capacity in Thailand by adding one tall can packaging line for evaporated milk.

“We want to take advantage of the growth in the evaporated milk segment in Thailand. The expansion will support our double-digit growth from Thailand,” he told reporters after the company’s annual general meeting (AGM) here today.

The capex is in addition to the RM50 million allocated for maintenance of all its other operations in Malaysia and Thailand.

Asked if the depreciation of the ringgit had any impact on the group’s bottom-line, he said, it has no short-term impact.

“Although most of the raw materials are purchased in US dollars, for the short term, we have already hedged them.

“In the long term, we are looking at how the ringgit would fare,” he said.             

On exports, Lim said, since they were traded in US dollar, this has helped mitigate slightly the fall of the ringgit.

“We are quite fortunate at this stage that raw material such as skimmed milk powder is off the historical high, so we do enjoy a little bit of savings on that,” he said.

Most of F&N exports were mainly derived from the dairy operation in Malaysia, which contributed about 20 per cent of dairy Malaysia sales, he said.

On the Goods and Services Tax (GST) which would be implemented in April, Lim said, the group was ready and would run simulation exercises by end-January to ensure a seamless transition into the new tax regime.

“We will transfer any savings from the new GST regime and elimination of government sales tax to our distributors and trade customers,” he said.

F&N was also working closely with trade partners and the various vendors in the supply chain in preparation for the GST implementation, he said.

Shareholders approved a single-tier dividend of 33 sen at the AGM. — Bernama

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