Monde Nissin Corporation’s meat alternative business, under the brand Quorn, continues to be a drag in the company’s financial performance in 2023 and has been offsetting growth in other segments.

In a disclosure to the Philippine Stock Exchange, Monde Nissin said “Our Meat Alternative business continues to navigate in a challenging environment as we expect a single digit decline for the fourth quarter.” 

While the UK retail market has remained weak and continues to affect the topline, the firm anticipates being at least EBITDA neutral in the fourth quarter.

During the firm’s third quarter report, Monde Nissin Chief Executive Officer Henry Soesanto said “The previously implemented restructuring of our Meat Alternative business has enabled us to maintain EBITDA breakeven for the second consecutive quarter. 

“Looking ahead, while it is hard to predict volumes in the near-term, I am hopeful that generally lowering commodity prices will provide some respite from the cost inflation we have not yet passed on.”

Meanwhile, the firm said “The annual impairment test in our meat alternative business is ongoing; however, we also believe the family’s financial support will largely cover any potential impairment at the parent level.”

Monde Nissin said its wholly owned Singapore subsidiary Monde Nissin Singapore Pte Ltd. (MNSPL) has received from the controlling family shareholders “a meaningful financial support to the valuation of the Company’s Meat Alternative Business.”

The financial support aims to significantly reduce the net cumulative impairment, if any, starting with the calendar year ending December 31, 2023 and every year thereafter up to calendar year ending December 31, 2032 with settlement (if any) occurring on a one-time basis on or before June 30, 2033. 

The cash settlement by the controlling family shareholders will be capped by the value of up to approximately 12 percent of outstanding shares (meaning 2.156 billion shares) of Monde Nissin based on the weighted average stock price for the last five trading days of calendar year 2032.

“This financial support by myself and the family shareholders comes after listening to and reflecting on the concerns that some of our shareholders have expressed about the current challenges in the meat alternative category which are impacting our business in the United Kingdom,” said Soesanto. 

He added that, “Despite our long-term view that the category has a bright future, we cannot ignore the headwinds we are facing. We have previously announced significant operational and strategic changes and now we wish to extend this significant personal financial support to help alleviate investors’ concern while we navigate through the current macroeconomic environment.”

The firm hinted that it is considering the sale of its meat alternative business as the principal shareholders’ top-up obligation will be terminated in case of the sale of 100 percent or a controlling stake in the meat alternative business.