Technology could ease pain of rising costs on F&B earnings

Singapore

RISING operational costs from more stringent foreign worker quotas will weigh on future earnings for Singapore's listed food & beverage companies, but technology could make the impact easier to digest.

DBS Group Research analysts found in a survey that most consumer companies are close to the 40 per cent service sector dependency ratio ceiling (DRC) threshold for hiring foreign workers, which means they will have to either replace foreigners with locals in their workforce - or displace foreigners with technology, or opt for a mix of both. This could bump operating costs because of higher wage costs and/or depreciation in the short-term from implementing technology.