Food Empire - UOB Kay Hian 2024-05-10: 1Q24 Revenue In Line; Coffee Prices Expected To Impact Margins

• Food Empire (SGX:F03) reported 1Q24 revenue of US$117.5m (+14.5% y-o-y), forming 26% of our full-year estimate. Revenue grew on continued robust consumer demand in Russia, as well as successful marketing efforts in Vietnam.
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1Q24 revenue in line with expectations; no profit figures disclosed.

• Unlike prior quarterly updates by Food Empire, no other figures were disclosed. Although profit figures were not disclosed, we expect margins to be temporarily impacted by rising commodity prices.

Higher y-o-y revenue from robust growth in Southeast Asia market.

• Revenue from Russia rose 3.2% y-o-y and 16% q-o-q to US$39.2m despite the currency depreciation of the Russian ruble against the US dollar. In local currency terms, Food Empire reported a substantial 27.4% y-o-y growth in revenue from Russia, signalling sustained strong demand in its largest operating market.
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• Notably, Southeast Asia revenue grew 35.3% y-o-y to US$29.9m, boosted by Food Empire's brand-building efforts in Vietnam. Vietnam has become Food Empire's fastest growing market, aided by the restructuring of its local sales team, newly-launched marketing tactics and promotions in line with festivities like Tet (8-14 Feb 24).

Expansion of non-dairy creamer production capacity completed; construction of new snack factory begins.

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John Cheong UOB Kay Hian Research | Heidi Mo UOB Kay Hian | https://research.uobkayhian.com/ 2024-05-10 SGinvestors.io

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