Monde Nissin Corp., maker of the widely-popular instant noodles Lucky Me!, reported a 14 percent decline in first half net income to P3.5 billion, reflecting the slide in gross profit, particularly in the meat alternative business, increased marketing expenses in the Asia-Pacific Branded Food and Beverage business, and foreign exchange loss.
Monde Nissin said that while total first half revenue rose 7 percent to P39.2 billion, gross profit declined by 2.2 percent to P12 billion as inflation, overhead costs and lower volume squeezed margins by 290 basis points to 30.5 percent.
It said APAC BFB net sales for the first half increased by 10 percent to P32.1 billion while sales in the Philippine alone was up 9.3 percent to P20 billion.
Monde Nissin noted robust growth in the sales of biscuits and other products but those gains were tempered by softening demand for noodles.
Its meat alternative business under Quorn Foods, meantime, saw a 5 percent decline in revenue to P7.1 billion due to a challenging retail market, particularly in the United Kingdom.
“The APAC BFB business saw topline growth moderate during the second quarter as volume growth slowed down in all categories, most noticeably in noodles. This reflects what we have observed over the past few months and what appears to be an overall macro trend of more modest consumption across many food and beverage categories,” Henry Soesanto, Monde Nissin’s chief executive officer, said in a statement.
But Soesanto said margins have started to improve in the second quarter and should continue to improve in the coming quarters. He said the third quarter results should show better numbers given last year’s lower base.
Soesanto said Monde Nissin’s completion of its restructuring of the meat alternatives business should result in savings for the food company. “Despite the continued (alternative meat) category challenges, the EBITDA improved during the second quarter and we are cautiously optimistic that this will continue in the coming quarters,” he added.
