Monde Nissin Corporation expects revenues to be higher this year on the back of price increases and higher consumer spending although net income is seen to be lower than last year due to higher costs.
“The price increases we took in the Philippines in June should partly alleviate the pressure on gross margins, but we must be mindful of the difficult circumstances our consumers are currently going through,” said Monde Nissin’s Chief Executive Henry Soesanto.
He noted that, “The recently announced stringent quarantine in the National Capital Region and some other parts of the country will be difficult for many.”
“For Quorn Foods, I fully hope to see a much faster growth in the second half of the year. It’s too soon to talk of full year earnings guidance but I believe mid-single digit revenue growth for the full year should be possible,” Soesanto said.
In a press briefing, Monde Nissin Chief Finance Officer Jesse Teo said attributable unaudited core net income declined 12.9 percent to P4.3 billion in the first half of 2021 compared to the same period last year.
Unaudited reported net income declined to P204 million, which primarily includes non-core and non-recurring items such as price difference and interest on redemption of the Arran convertible notes at the IPO price of P13.50 per share, IPO-related expenses, and deferred tax liability adjustments reflecting revised corporate tax rules in the UK.
“Our business proved resilient in the first half of the year achieving modest topline growth. We undertook some price increases in June to partly recover rising commodity input costs and continue to implement supply chain cost savings,” said Soesanto.
Net sales in the first half of 2021 reached P33.8 billion, up 1.2 percent compared to same period last year. A balanced portfolio and increased Asia-Pacific Branded Food and Beverage Business (APAC BFB) international sales helped sustain the first half 2020 sales level.
Core EBITDA declined 14.5 percent to P7.2 billion compared with the same period last year, primarily driven by increased investment in new product development and higher advertising and promotion spent for brand building.
A substantial increase in gross margin at Quorn Foods was more than offset by a tapered gross margin for APAC BFB due to rising commodity costs.
“We have achieved significant progress on several long-term growth initiatives, laying the foundation for growth in both our APAC BFB and Meat Alternative businesses,” said Soesanto.
He added that, “These initiatives include adding needed production capacity in the Philippines and UK, commercialization of products aligned with our aspiration, increasing new product development, and expanding brand awareness activities.” APAC BFB sales increased by 1.7 percent to P26.2 billion in the first half of 2021 versus last year.
The increase was primarily driven by the international business, up 68.1 percent compared to same period last year, while domestic business declined by 1.3 percent as the growth in noodles was offset by decline in biscuits.
Revenues in the first half of 2020 reflected the surge in relief orders from the Taal Volcano eruption in January and February as well as pantry stocking at the beginning of the COVID Pandemic.
Net sales in the meat alternative business declined by 0.6 percent to P7.5 billion versus the comparable 2020 period, reflecting softness across the U.K. and U.S. retail market.
Retail sales were adversely impacted in the second quarter as a relaxation of COVID restrictions resulted in greater out-of-home consumption.