Monde Nissin Corporation reported a net loss of P625 million last year as it continued to suffer from its meat alternative business although this is an improvement from the P13.02 net loss incurred in 2022.
In a disclosure to the Philippine Stock Exchange, the firm said its reported net loss for 2023 was mainly due to a non-cash, non-operating impairment of assets in the Meat Alternative business of P10.1 billion after-tax, partly offset by P1.3 billion of Guaranty Asset Gain.
“For Meat Alternatives, we continue to face a challenging environment, which necessitated us incurring a further impairment of P10.1 billion after-tax this year, which was largely offset by the previously announced financial support offered by Monde Nissin’s controlling family shareholders, such that retained earnings were minimally impacted at the level of the listed parent company,” said Monde Nissin Chief Executive Officer Henry Soesanto.
He noted that, “The impairment was due to a higher Weighted Average Cost of Capital (“WACC”) and a tempered EBITDA cash flow forecast. We believe a continued focus on cost reduction and improving efficiencies, aided by better trends in input costs, will reduce the risks of further substantial impairments.”
Attributable core net income improved 15.7 percent to P7.6 billion in 2023 due to the strong performance of its Asia Pacific Branded Food and Beverage (APAC BFB) business.
Monde Nissin said this was due to pricing and lower commodity costs in the APAC BFB business, offset by the decline in Quorn (meat alternative) gross margin.
“The APAC BFB business saw strong topline growth and profitability, driving record revenues and translating into strong operating cash flows. This growth was aided by both volume and price across all our categories,” Soesanto said.
Net sales rose 9.2 percent to P80.17 billion in 2023 from P73.94 billion in 2022 as the APAC BFB sales for the full year grew by 12.6 percent to P65.9 billion from P58.55 billion.
However, net sales for the meat alternative business declined 4.3 percent to P14.23 billion from the P15.39 billion registered in 2022.
The Meat Alternative revenue declined by a steeper 6.3 percent to P3.9 bilion on a comparable and constant currency basis in the fourth quarter due to the continued category headwinds.
The UK declined by 6.5 percent on a comparable and constant currency basis in the fourth quarter due to the challenging retail market. The foodservice revenue grew by 5.5 percent on a comparable basis in the last quarter of 2023.
“During the first quarter, we expect low single-digit revenue growth, partly due to the timing of the Holy Week holiday in the Philippines, and a robust gross margin improvement of more than 600 bps year-over-year and more than 300 bps sequentially,” Soesanto said.
He added that, “Despite continued (meat alternative) category headwinds, our foodservice business continues to perform well, showing 6.0 percent revenue growth for the year. We expect a high single-digit revenue decline and approximately EBITDA breakeven for the first quarter. Our input costs continue to improve, and we expect this to be reflected in our margins as the year progresses.”