- Revenue hit a record high (+12% y-o-y) due to strong double-digit growth in the SEA, South Asia, Ukraine, Kazakhstan and CIS segments. Food Empire is reaping the benefits of its diversification strategy and growing emphasis on Asia. We also note the healthy pass-through of the higher coffee bean costs.
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Results above expectations.
- After excluding a one-off fair value gain of US$2.8m from redeemable exchangeable notes, Food Empire (SGX:F03)'s 2024 core net profit of US$50m (-11% y-o-y) is above expectations, forming 108% of our full-year forecast.
- Revenue for 2024 rose 12% y-o-y, due to its effective diversification strategy and increasing emphasis on the fast-growing Asia region. However, core net margin fell 3ppt y-o-y, due to record-high coffee prices, as well as a rise in sales and marketing expenses (+14% y-o-y) and legal and professional expenses (+16% y-o-y).
Fourth straight year of revenue growth.
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- South Asia (+25% y-o-y), from increased sales of instant coffee products and pricing adjustments; and
- Ukraine, Kazakhstan and Commonwealth of Independent States (CIS) (+13% y-o-y) due to pricing adjustments, new product launches and contributions from its new subsidiary Tea House LLP.
- Revenue from Russia declined 1% y-o-y due to the weaker Russian ruble against the US dollar, but rose 7% y-o-y in local currency terms due to pricing adjustments to reflect higher ingredient costs.
Higher final dividend but lower total dividend.
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