Delfi Q3 topline falls 16.4%, but sees uptick from Q2

CHOCOLATE confectionery company Delfi posted revenue of US$93.8 million (S$125.8 million), down 16.4 per cent from US$112.2 million in the corresponding quarter last year.

In a bourse filing on Wednesday, the company said that this has been a "turbulent year", with the Covid-19 pandemic negatively impacting economies and businesses globally.

On a year-on-year basis, Delfi's revenue contributions from its Indonesian market fell 22.2 per cent to US$61.1 million, while revenue from its regional markets fell 2.9 per cent to US$32.7 million.

However, on a quarter-on-quarter basis, Delfi's topline figures showed signs of improvement amid the progressive easing of various lockdown measures at the end of the second quarter.

Its overall revenue booked a 25.4 per cent increase from Q2, due primarily to a 35.6 per cent q-o-q increase in contribution from its Indonesia market. The regional markets segment's revenue, too, rose 9.8 per cent.

Delfi said that the improvement in revenue was due mainly to the strength of its own brand portfolio, which registered "high double-digit growth" from its premium format category, as well as the relaunch of its value products in the quarter under review. Delfi added that it had continued to come up with new products over the course of the quarter.

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The company's earnings before interest, taxes, depreciation and amortisation (Ebitda) fell by 58.4 per cent and 18.4 per cent on y-o-y and q-o-q bases respectively to US$5.3 million.

Delfi's gross profit margin for the quarter under review also came in lower at 34.3 per cent, compared to 34.7 per cent last year and 35.3 per cent in the previous quarter.

Its nine-month gross profit margin held fairly stable at 35.7 per cent, compared to 35.6 per cent in the year-ago period, which the company attributed to a combination of higher contributions from its premium-format category as well as its ongoing initiatives to mitigate higher costs such as selected price increases and on-going cost containment initiatives.

While it did not provide specific figures, the company said its advertising and promotion expenses will be "relatively high" as it had committed to a "significant number of promotional activities" with its retail customers before the pandemic began.

As at end-September, Delfi had generated free cash flow of US$29.5 million and had a cash balance of US$60 million, which the company said would augur it well to "face the uncertain challenges ahead".

The group also claimed it had tightened its collections and cut back on capital spending as soon as it saw the coronavirus begin to spread outside China.

Delfi said that while recent news of vaccines being developed has brought some cheer, it expects macroeconomic and operating environments in its regional markets to "remain challenging".

Barring unforeseen circumstances, the company believes that the momentum from the third quarter will continue into the fourth one, although it warns that it is too early to assess whether it will be back to the pre-pandemic levels due to continued volatility and uncertainty.

"Under this new normal, we still see growth in our business albeit at a slower rate in the short term," added the company.

Shares of Delfi closed flat at 62.5 Singapore cents on Wednesday prior to the results announcement.