Monde Nissin incurs P13-B net loss in 2022

Food manufacturer Monde Nissin Corporation reported a 301 percent plunge to a net loss of P13.02 billion last year, from the P3.25 billion earned in 2021.
In a disclosure to the Philippine Stock Exchange, the firm said this is mainly due to a non-cash, non-operating impairment of the intangible assets of Marlow Foods, which owns Quorn and Cauldron.
The impairment was caused by the application of a higher discount rate due to the prevailing higher interest rates and risk premiums, some margin compression, and rationalization of the trend in the meat alternative category.
The non-recurring net loss of P19.6 billion for 2022 consisted mainly of impairment and restructuring costs for its Meat Alternative business, partially offset by the derivative gains from the unwinding of the cross-currency swap.
Monde Nissin’s consolidated revenue grew 6.7 percent to P73.9 billion last year year due to the robust growth of its Asia-Pacific Branded Food and Beverage (APAC BFB) categories, aided by the strong recovery of domestic noodles.
Core gross profit for the year declined by 9.6 percent to P23.1 billion, while core gross margin for the full year declined by 560 bps year-on-year to 31.3 percent.
Raw material and energy costs were elevated partly due to the impact of delayed depletion of commodity lock-ins entered earlier in the year due to the temporary decline in sales of noodles in the third quarter, and were only partially mitigated by price increases.
Core attributable net income declined by 19.6 percent last year to P6.6 billion, primarily driven by a decline in gross profit, increased logistical costs, and investments in organizational resources, partially offset by an effective US dollar hedge.
APAC BFB net sales for the full year increased by 8.4 percent to P58.6 bilion, mainly driven by price increases in all categories and especially strong volume growth in biscuits, beverages, and culinary.
The domestic business grew 9.3 percent year-on-year to P55.0 billion for 2022 as the growth surpassing pre-pandemic levels in biscuits, beverages, and culinary, and the strong recovery in noodles.
International revenue declined by 4.1 percent to P3.5 billionn for the full year due to a temporary slowdown as measures to ensure global compliance were strengthened.
Core gross profit for the full year decreased by 7.2 percent to P18.2 billion with core gross margin down 520 bps to 31.0 percent due to commodity cost inflation, partially mitigated by price increases.
Meat Alternative revenue increased by 0.8 percent for the full year on an organic basis due to price increases, strong growth in foodservice, and market share gain in the UK retail business.
On a reported basis, revenue for the full year increased by 1.0 percent to P15.4 billion. While retail sales remain challenged, Quorn UK and ROW grew 1.4 percent and 5.4 percent year-on-year on an organic basis for the full year, respectively. The foodservice grew 51.5 percent year-on-year for the full year.
“Despite the challenges we faced this past year with inflation headwinds and our noodles recall in the third quarter, we finished the year with strong topline growth across all of our categories in APAC BFB Henry Soesanto, Chief Executive Officer, commented,” Monde Nissin Chief Executie officer Henry Soesanto.
He added that, “Moreover, our noodle product line proved its resiliency, largely recovering from the dip in the third quarter by the end of the fourth quarter with a double-digit volume growth.
“Meanwhile, volume growth in biscuits, beverages, and culinary surpassed pre-pandemic levels. Our core income declined due to locking in key commodity prices last year but we expect margins to benefit as these lock-ins expire in the first half of this year,” Soesanto said.
Turning to the Meat Alternative business, he explained that, “Booking the impairment provision, while prudent, is a frustrating set back, driven mainly by increases in global interest rates and risk premiums.”
“However, these are not the only causes of our impairment provision which also reflects recent margin compression associated with our price increases lagging cost inflation, some reduction in sentiment toward the meat alternative category; and costs associated with our recent focus in the US market where we are currently undertaking a restructuring,” he said.