Food Empire H1 profit falls 1.5% despite higher revenue

FOOD and beverage manufacturer Food Empire Holdings posted a 1.5 per cent decline in net profit to US$26.7 million in the six months ended Jun 30, 2023, from US$27.1 million in the corresponding period a year earlier.

This was despite an 11.8 per cent increase in revenue to US$198.2 million over the same period, from US$177.4 million the year before.

In its bourse filing on Thursday (Aug 10), the group said that the higher revenue was a result of higher volumes and higher pricing across most of its core markets.

This was offset by depreciation of the Russian rouble and Ukrainian hryvnia against the US dollar, as well as lower revenue from the European market after the group divested its business there in FY2022.

Still, the group’s Russia as well as Ukraine, Kazakhstan and Commonwealth of Independent States (CIS) revenue segments saw the largest increases. The Russia segment’s revenue grew 23.6 per cent to US$70.6 million, while that of the Ukraine, Kazakhstan and CIS segment rose 20 per cent to US$49.5 million.

However, unfavourable exchange rate movements as well as negative contributions from associates led to the decline in net profit. The group noted that the company posted a US$0.1 million share of associates’ losses in the first half of the year, compared to a profit of US$4 million over the same period last year.

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As for the group’s outlook, Food Empire noted that inflation remains higher than most central bank targets, even if it seems to have peaked.

“The group remains cautious of the economic outlook for Russia and Ukraine due to (the) volatile geopolitical situation and weakening Russian rouble, but expects consumer demand to remain steady,” it said.

It added: “In Kazakhstan and CIS, the group has experienced robust demand for its products and foresees growth momentum to continue.”

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Shares of Food Empire fell 0.9 per cent, or S$0.01, to S$1.07 on Thursday, before the results were released.