Monde Nissin profit dips as commodity prices rise

FOOD and beverage company Monde Nissin Corp. on Thursday reported P8.2 billion in core net income attributable to shareholders for 2021, down 5.4% amid inflation pressures.

In the fourth quarter of last year, the decline in its attributable income was at 6% to P1.07 billion.

“While we had a strong start to the year, the central challenge for us is how we deal with the global wall of commodity inflation. There is only so much that can be done through supply chain efficiencies, after which there is a mathematical inevitability that we will need to pass on cost increases to our consumers,” Monde Nissin Chief Executive Henry Soesanto said in a virtual briefing.

But he said “all the work” initiated last year has set the company for growth in 2022.

“We will continue to innovate for upcoming product launches, improve distribution in key channels, and market to drive more consumption moments for our products,” Mr. Soesanto added.

In its unaudited financial report for 2021, the company reported consolidated revenue growth of 2% to P69.3 billion, and fourth-quarter growth of 1.4% to P17.8 billion, due to its strong sales performance.

“Our sales increase was driven by pricing action,” Chief Finance Officer Jesse C. Teo said as he cited other drivers such as a favorable foreign exchange rate, and “balanced categories” for the year’s performance.

Core earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 15.2% to P13.2 billion, amid the “continuing high-inflation environment and brand-building activities through advertising and promotion.”

“2021 was a transformative year for Monde Nissin,” Mr. Soesanto said, referring to the publicly listed company’s distinction as the largest initial public offering (IPO) in the country so far.

Monde Nissin raised P48.6 billion from its market listing last year.

“The strong support by a wide range of domestic and international investors provided us with funding to continue our growth and strategic initiatives, which we made significant progress on during the year. Additionally, we were able to grow our revenue despite a challenging operating and economic environment that included inflationary cost pressures and supply chain disruptions,” Mr. Soesanto said.

Monde Nissin has two core businesses: the Asia-Pacific branded food and beverage business (APAC BFB), and the meat alternative business.

The branded business is divided into product groups, namely: instant noodles, biscuits, and other products such as beverages, baked goods and culinary aid. Some of the brands under this business are Lucky Me!, SkyFlakes, Fita, and Mama Sita’s.

The meat alternative business includes the Quorn and Cauldron brands.

Last year, APAC BFB recorded a 2.1% increase in net sales to P54 billion as the international business grew 21.5% to P3.7 billion despite “continued shipping challenges.” The domestic business grew by 1% to P50.4 billion on sustained vol-umes for noodles and a recovery in the biscuits segment in the fourth quarter with a 3.2% growth.

Core EBITDA declined by 11.7% to P11.7 billion due to the normalization of advertising and promotion support to sustain the growth experienced during the pandemic.

Meanwhile, revenues of the meat alternative business decreased by 3.9% amid its stable market share in the UK.

“Price increases taken in the US and UK in late 2020 and early 2021, respectively, resulted in full-year gross profit increasing by 8.1% to P6 billion,” Monde Nissin said.

Core EBITDA declined by 35.6% to P1.5 billion in the full year due to investments in research and development, as well as advertising and promotions.

“Increased global warming and acute commodity inflation show our aspiration to create sustainable food security solutions is more important than ever. Our conviction in Quorn’s production of protein and our determination to play a role in development of the overall category continues. Meanwhile, our new production facility in Southern Luzon, which will also produce our lower oil content noodles, will help us address continued strong demand in our APAC BFB,” Mr. Soesanto said.

He said that Quorn “remains to be the strongest meat alternative brand in the UK with the highest market share, brand awareness, and repeat purchase,” with seven of the top 11 rate of sale performers being Quorn’s new product launches.

“While further price increases from us seem probable, we are mitigating these by having hedged a significant proportion of our input costs. Additionally, due to the current geopolitical situation in Ukraine, we have taken steps in mitigating potential supply chain disruptions by reviewing our key raw materials and ensuring we maintain higher buffer levels. We will continue to review and take necessary measures as the situation evolves,” he added.

At the stock exchange on Thursday, Monde Nissin shares climbed by P0.08 or 0.6% to close at P13.50 per share. — Luisa Maria Jacinta C. Jocson