Food Empire reports 11.3% decline in 1HFY2024 earnings of US$23.6 mil

Felicia Tan
4-min read

Total revenue rose by 13.6% y-o-y to US$225.2 million for the period.

Food Empire has reported earnings of US$23.6 million ($31.3 million) for the 1HFY2024 ended June 30, 11.3% lower y-o-y.

Profit for the period fell by 12.8% y-o-y to US$23.2 million due to lower profit contribution from the group’s Russia market due to “short term price disruption” in the market. The decrease was partly offset by higher profit contributions from the rest of the group’s markets in spite of higher ingredient prices and higher operating expenses.

Total revenue rose by 13.6% y-o-y to US$225.2 million as Food Empire’s markets – except Russia and others – grew.

Revenue from Russia fell by 3.6% y-o-y to US$68.1 million mainly due to the depreciation of the Russian ruble against the US dollar. In local currency terms, Food Empire’s Russian market saw revenue increase by 13.4% y-o-y.

Revenue from Southeast Asia surged by 34.8% y-o-y to US$61.8 million with Vietnam emerging as the group’s fastest growing market in 2024 to-date. “The group has expanded its sales force and rolled out a slew of direct and indirect sales and marketing activities and promotions across both traditional and modern platforms to capture a larger market share,” says Food Empire in its Aug 12 statement.

“This resulted in significant revenue contribution. With the proven success of its customer engagement efforts, the group will continue to carry out campaigns to build up its brands in this market,” it adds.

Food Empire saw higher revenue in Malaysia due to increased demand from the Middle East and East Asian markets due to higher production volume from the expanded non-dairy creamer factory in the 2QFY2024. The newly-expanded plant is expected to ramp production to full capacity over the next 24 to 36 months.

Ukraine, Kazakhstan and the Commonwealth of Independent States (CIS) saw revenue increase by 15.7% y-o-y to US$57.3 million due to higher sales volume from stronger demand.

Revenue in South Asia rose by 36.0% y-o-y to US$29.6 million. Food Empire’s freeze dry and spray dry coffee plants are running at full capacity with higher revenue from stronger sales in India. The higher revenue was also due to higher pricing in line with the higher cost of raw materials.

Revenue from “others” fell by 19.3% y-o-y to US$8.5 million.

“We are very excited about the performance of our South-East Asia and South Asia segments, which have maintained a strong growth trajectory due to the successful execution of our business strategies. We intend to allocate more resources to these segments as part of the group’s plans to further develop our business there,” says Sudeep Nair, CEO of Food Empire.

As at June 30, cash and cash equivalents stood at US$75.8 million.

In its outlook statement, the group says it remains “vigilant” of any potential impact that the ongoing geopolitical tensions and macroeconomic environment will have on its business. It will also continue to conduct periodic reviews and manage its strategies to mitigate the rising cost of raw materials.

It adds that it is “cautiously optimistic” with the global instant coffee industry expected to grow at a compound annual growth rate (CAGR) of 6.4% from 2023 to reach US$60.7 billion by 2032. This is mainly attributed to the higher demand for convenience foods and more product options.

“Food Empire is well-positioned to capture this growth with significant expansion projects in the pipeline. Besides the recently completed expansion of its non-dairy creamer production facilities in Malaysia, the group’s pipeline includes a second snack production factory in Malaysia which is currently being built and expected to be operational by the first half of 2025,” says the group.

“The group is also currently constructing a coffee mix production facility in Kazakhstan, which would be its first facility in Central Asia when completed by end 2025,” it adds.

Shares in Food Empire closed 1 cent higher or 1.03% up at 98.5 cents on Aug 12.

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