After first half profits Tomble on rising commodity prices, Nissin World Sees earnings recovery.
Tycoon Betty Ang and his family controlled Monde Nissin expects revenue to recover after the profits torn in June, struck by extraordinary charges and rising prices of raw materials, during the second half.
Thursday’s net profit decreased by 96 percent to 204 million pesos ($4 million) in the first half mainly due to unrepeated charges relating to the reimbursement of convertible bonds and tax deferrals. Excluding special goods, net profits decreased 13% to 4,3 billion pesos, lowered gross margins for key raw materials such as palm oil and wheat.
Henry Soesanto, CEO of Monde Nissin, said in a virtual media briefing, “The second half is promising.”
Monde Nissin said it expects mid-single digit income growth for the whole of the year, which is supported by price increases for its noodles and biscuits and improved sales in the Quorn Foods alternative food unit, which has expanded its US distribution network.
The First Metro Securities Analyst Estella Dhel Villamiel said in an emailed reply to Forbes Asia: “Heavy commodity prices are transient, and should be mitigated by price increases and efficacy programs,” “We are still expecting better performance from Monde Nissin.”
First Metro expects the net profit of Monde Nissin to rise 62% this year to 11.9 billion pesos before exceptional items, with revenues rising by 6.9% to 72.6 billion pesos. Besides its main market share on the Philippine instant noodle and biscuits markets, the brokerage said Quorn Foods, the subsidiary for alternative meats, will be the main driver of growth as they scale up distribution channels in the U.S.
Quorn’s sales decreased by 0.6% to 7.5 billion pesos, representing 22% of the total revenue in the first half of Monde Nissin of 33.8 trillion pesos. The United Kingdom had 5.9 trillion pesos of sales, while the United States had 683 million pesos and 968 million pesos in the rest of the world.
“Quorn’s potential in the US is enormous,” said Soesanto.
Monde Nissin makes a huge bet on alternative meats, which it believes to be the next area for growth. The company bought Quorn from its largest initial public offering in the Philippine in 2015, amounting to £550 million, and plans to spend more than half of the 47.5 billion pesos that it raised in June.
In 1979 Ang and the late Indonesian tycoon Hidajat Darmono, whose family owns the Indonesian biscuit factory in Khong Guan, co-founded the company. Initially, Monde Nissin produced cookies before they branched off to instant noodles in 1989. Today, its instant noodle Lucky Me! has about 70% of the Philippine market, while its biscuits such as SkyFlakes and Fita make up 31% of the market, according to a Nielsen survey.
Ang 66 is married to the son of Davidiono Kweefanus, 69, president of Monde Nissin and Vice Chairman of the company. Ang is also president of Monde Nissin. Based on their total stake in the company, their net worth is significantly over 1 milliard dollars.