SINGAPORE (May 11): Food Empire Holdings has announced first quarter earnings of US$6.3 million ($8.9 million), up 58.8% from the US$4 million a year ago on higher revenue.
Group revenue grew 23.6% on-year to US$62.4 million as compared to US$50.5 million previously.
The higher revenue was driven mainly by improvements the food and beverage (F&B) maker’s Russia and Kazakhstan & CIS markets, which reported a 23% and 141.6% to US$29.9 million and $9.2 million respectively.
While Russia’s improvement was due to the appreciation of the Russian Ruble against the US doalr, the group revenue improvement in its Kazakhstan & CIS markets was mainly the result of a change in its business model, as well as a reduction of price compensation to a distributor in Kazakhstan, coupled with aggressive promotion.
Other markets also recorded a 37.9% increase in revenue to US$11.8 million as higher sales contribution was recorded from Food Empire’s non-dairy creamer plant in Malaysia and instant coffee plant in India.
The higher revenue from the abovementioned markets were however offset by lower contributions from Ukraine and Indochina, which declined 14.9% and 185 to US$4.4 million and US$7 million respectively.
In line with the higher revenue, selling and distribution expenses grew 24% to US$9.5 million, while general and administrative expenses increased 21.6% to US$8 million.
As at March 31, 2017, inventories grew to US$49.8 million from US$43.6 million on Dec 31, due to translation gain of inventories held in currencies other than the US dollar and stock-up of inventories.
Net assets were US$161.8 million, while net asset value (NAV) was 30.36 US cents as compared to 28.83 US cents.
Food Empire says its expects the economies of its key markets such as Russia, Kazakhstan and CIS countries to fare better compared to a year ago as currencies of these markets begin to stabilise.
The group continues to be on the lookout for opportunities to expand into new geographies outside its core markets to provide a more balanced portfolio, and also plans to replicate its proven business model in other regions in Asia following its successful market diversification efforts in Indonesia.
Noting continued growth momentum in its upstream progress and the successful vertical integration of its supply chain, Food Empire says it intends to ramp up production scale to improve profitability – in addition to tapping on strategic mergers and acquisitions to expand further upstream and downstream, as well as enter new markets.
Shares of Food Empire closed flat at 58 cents on Thursday.