SINGAPORE (March 1): Food Empire Holdings is back in the black after posting US$2.9 million ($4.1 million) of earnings for the fourth quarter ended Dec 31 compared to the group’s restated 4Q15 loss of $3.1 million reported a year ago.
The stronger bottomline came on the back of higher revenue and lower expenses. The restatement of FY15 results was due to the adoption of revised Financial Reporting Standards which came into effect on Jan 1 2016.
For the full year, the food and beverage (F&B) sector posted earnings of US$14.5 million, more than 70 times its restated profit of US$0.2 million in FY15.
Revenue for the quarter grew 11.4% to US$70 million from US$62.9 million in the previous year as sales across all markets registered an improvement in revenue contributions, with the exception being Kazakhstan and CIS market where revenue declined 33.6% to US$7 million.
In particular, the group’s Indochina and other markets improved by 28.7% and 41.1% to US$12 million and US$14.7 million respectively.
Expenses for selling & distribution rose 12.4% to US$13.2 million during the quarter, mainly attributed to higher expenses for advertising and promotion activities coupled with higher manpower cost.
General & administrative expenses, too, grew 2.3% to US$9 million on higher manpower cost, provision for bad debts, legal and professional expenses, and stock obsolescence.
However, this was more than offset by a 92.4% decline in net other expenses to US$0.5 million from US$6.4 million a year ago, due to lower foreign exchange losses as wel as lower loss on disposal of property, plant and equipment as compared to the previous year.
As Food Empire is economically exposed to both Ukrainian and Russian markets, it was also affected by the revaluation of its outstanding trade receivables denominated in currencies other than the US dollar, i.e. the Hryvnia and Ruble.
In its outlook, the group says its key markets remain vulnerable to the volatility in global oil prices, which may positively or negatively impact the its financial performance going forward.
Food Empire says it has begun efforts to move towards premium coffee products as well as expand its snacks offerings, and intends to step up the production of its upstream projects to reap greater economies of scale and improve profitability.
A first and final dividend of 0.6 cents per share has been declared by the board.
Shares of Food Empire closed 2.7% lower at 55 cents on Tuesday.
