Food Empire’s Q1 net profit up 50.9% to US$13.8 million on higher operating profits

FOOD Empire posted a 50.9 per cent rise in net profit after tax to US$13.8 million for its first quarter ended Mar 31, from US$9.2 million the year before.

Revenue for Q1 rose 24.2 per cent to US$102.6 million, from US$82.6 million a year earlier, on stronger demand for the company’s branded products, the food and beverage manufacturer said in a business update on Thursday (May 11).

The higher year-on-year revenue came also from lower sales recorded in the first quarter of 2022, following Russia’s attack on Ukraine. The company lists these two countries as being among the key markets for its products; Food Empire also has manufacturing facilities in these two places.

Revenue from the group’s Russia segment was up 44 per cent to US$38 million, from US$26.4 million previously; its Ukraine, Kazakhstan and the Commonwealth of Independent States (CIS, comprising former republics of the Soviet Union) segment rose 52.2 per cent to US$25.5 million from US$16.8 million.

South Asia contributed US$10.9 million in revenue in Q1, 29.6 per cent higher than the S$8.4 million a year ago.

In contrast, revenue generated from South-east Asia fell 10.4 per cent to US$22.1 million, from US$24.7 million a year earlier. Food Empire attributed this to continued post-pandemic normalisation in its Vietnam market, as well as lower output from its non-dairy creamer factory in Malaysia, due to one-off supply chain issues.

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Revenue declined in the group’s other segments by 4.3 per cent to US$6.1 million, from US$6.4 million in the preceding year-ago period.

Giving an update on its business outlook, the company said its Russia, Ukraine, Kazakhstan and CIS segments have been performing well, and it will continue to invest in its brands to gain market share.

At the same time, given the uncertain geopolitical situation in the region, it will continue to monitor the economic and political developments and “implement strategies to mitigate the effects of these developments”.

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For its South-east Asia segment, Food Empire will spend more on advertising and promotion in the Vietnam market to achieve higher revenue.

As for its South Asia segment, the group’s spray-dried and freeze-dried coffee plants have been “operating at optimal capacity to meet international demand that remains robust”. It expects to benefit from favourable pricing for these products. Demand continues to exceed supply.

Shares of Food Empire closed S$0.05 or 5.1 per cent higher at S$1.04 on Thursday, before the results were announced.