Food Empire’s net profit rises 34.4% despite challenges in Russia, Ukraine

DESPITE severe geopolitical challenges in its key Russia and Ukraine markets, mainboard-listed food and beverage manufacturer Food Empire : F03 0%, registered higher revenue and net profit for the first fiscal quarter that ended Mar 31, 2022.

The group’s net profit after tax rose 34.4 per cent to US$9.2 million for the quarter, from US$6.8 million in the year-ago period. The increase was mainly due to higher average selling prices of its products, lower advertising and promotional expense - coupled with higher share of associated profit despite higher foreign exchange loss, the group noted in a business update on Wednesday (May 11).

Revenue increased by 7.6 per cent to US$82.6 million from US$76.8 million previously, on the back of strong contributions from the group’s freeze dry coffee plant in India which commenced operations in Q2 2021. The plant is seeing strong international demand and the group expects to benefit from the trend for the foreseeable future. However, costs are expected to remain high due to record international freight rates and higher raw material prices, the update noted.

For Q1 2022, selling and marketing expenses decreased by 33.2 per cent to US$6.2 million from US$9.3 million previously, due to lower advertising and promotional expenses as well as lower manpower cost.

General and administrative expenses fell by 6 per cent to US$7.8 million from US$8.3 million previously attributing to lower depreciation and inventory obsolescence provision.  

For its outlook, the group said that it expects the business environment in its key Russia and Ukraine markets for FY2022 to remain challenging due to ongoing conflict between the two countries, which has resulted in massive uncertainties and deteriorating economic fundamentals for both Russia and Ukraine.

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“Nonetheless, demand remains firm in both markets and the group has implemented a range of measures to mitigate disruptions and ensure business continuity,” it added.

Outside of Russia and Ukraine, business in other markets such as Vietnam, Malaysia and India, “continues to witness an uptick in growth momentum”, the group noted.

Shares of Food Empire closed up 8.3 per cent or S$0.04 at S$0.52 on Wednesday, before the business update.