Executive Chairman's Message
(Extracted from Annual Report 2024)
Dear Valued Shareholders,
FY2024 was a good year for Food Empire. Amidst significant challenges brought on by geopolitical conflicts, trade tensions and climate change, we achieved strong growth with revenue rising 11.9% year-on-year ("yoy") to a new record of US$476.3 million. Although our normalised net profit after tax ("NPAT") came in 11.4% lower yoy at US$50.0 million1, it is still a very good bottom-line performance and the second highest in the Group's history on a normalised basis.
Our results are a strong testament of our Group's resilience and agility in navigating an increasingly complex business landscape and our ability to operate successfully in extreme environments.
During the year, ongoing geopolitical tensions in Eastern Europe and the Middle East made global trade difficult as it resulted in severe disruptions to trade routes, which led to major logistical inconveniences and resulted in higher freight charges. We were also affected by rising operational costs caused by inflation and the increasing cost of raw materials such as coffee beans, which rose to record levels due to the effect of climate change on supply.
Despite these headwinds, we found ways to optimise our business processes and intensified our sales and marketing efforts, resulting in healthy revenue performance across all our segments.
ENHANCING SHAREHOLDER VALUE
In line with our good results and as a reflection of our confidence in Food Empire's business prospects, the Board of Directors has proposed a first and final dividend of 6.0 Singapore cents per ordinary share and a special dividend of 2.0 Singapore cents per ordinary share, bringing the total dividend for FY2024 to 8.0 Singapore cents per ordinary share.
This is the third consecutive year of increase in ordinary dividends, and it amplifies our strong commitment to creating and returning value to our shareholders. If the proposed dividend for FY2024 is approved by shareholders at the upcoming Annual General Meeting, the Group would have returned a total of S$155.4 million to shareholders between FY2021 and FY2024. This includes S$130.2 million in dividends and S$25.2 million in the form of share buybacks.
As at 31 December 2024, the Company had, pursuant to the Share Buyback Mandate approved by the Shareholders at the 2024 EGM, purchased an aggregate of 3,735,000 shares through a series of market purchases during the year.
SECURING MARKET DOMINANCE
In FY2024, we continued to strengthen our leadership position, especially in Asia. Vietnam led the way as the Group's fastest-growing consumer market as our brands gain new ground in market dominance to improve our market share.
Elsewhere, in Russia, our sales continued to grow in local currency terms despite market challenges, and this was due to the strong standing of our flagship MacCoffee brand and our effective price positioning. Our Ukraine, Kazakhstan and CIS markets segment also delivered increased revenue with higher contribution from all markets in this segment.
In our ingredients manufacturing business, both our freezedried and spray-dried soluble coffee manufacturing facilities in India are running at optimum capacities and delivering strong results. In Malaysia, we achieved higher sales volumes of non-dairy creamer due to the expanded capacity of our non-dairy creamer manufacturing facility while our snack business also delivered an increase in revenue due to higher sales volumes.
The above achievements were possible due to our strategic investments in capacity expansion, brand building and continued focus on South Asia and South-East Asia over the past decade that reinforced Food Empire's ability to meet growing demand and produce a good set of result.
STRENGTHENING ASIA
Over the past decade, the international business landscape has undergone significant shift, marked by populism and nationalism. Post-election policy changes in the US have exacerbated the trend with threats of trade protectionism against many of its major trading partners. The world is facing even greater unpredictability with serious implications on national security, currency markets and global economy.
Against the backdrop of global uncertainties, the Group has continuously invested in value-enhancing strategic projects to position us for sustainable growth. This multi-year effort, which started in the early 2010s, has enabled us to effectively diversify our business risks. In the process, we have tapped into the growing affluence of Asia. Its tremendous transformational potential is becoming increasingly apparent. Today the region is home to some of the Group's fastest growing market segments.
To position ourselves for the next phase of Asia-led growth, we have commenced efforts to further strengthen our Asia presence with a slew of new investments, which should deliver quality growth in the years to come and improved earnings visibility for the Group.
In 2Q2024, we successfully completed the expansion of our non-dairy creamer manufacturing facility in Malaysia, effectively doubling our non-dairy creamer capacity. The newly added capacity is expected to ramp up to full utilisation over the next two to three years.
In FY2024, we unveiled plans to build our first coffee-mix production facility in Kazakhstan. When completed by end of 2025, it will serve our existing markets in the Central Asia region more efficiently while enabling us to explore new commercial opportunities in the region.
We also expect our snack business to be boosted with the successful expansion of our production factory in Malaysia, which is slated to commence commercial production by second quarter of 2025.
In addition, we announced a US$80.0 million commitment to build a new freeze-dried soluble coffee manufacturing facility in Binh Dinh, Vietnam, slated for completion in early 2028. This represents a milestone for our ingredient manufacturing business and together with our existing soluble coffee manufacturing facilities in India, position us as a major player in the soluble coffee space in Asia.
In FY2024, we also entered into a strategic partnership with Ikhlas Capital, an ASEAN private equity fund manager focused on growth, transformation and cross border value creation. Proceeds from the US$40.0 million, 5-year, 5.5% Redeemable Exchangeable Notes will be used to drive capital expenditures and merger and acquisitions in the regions. We are excited about this strategic partnership and believe that Ikhlas Capital's regional presence, knowledge and network in South-East Asia will help the Group further accelerate growth and scale in the South-East Asia and internationally.
IMPROVING BRAND RECOGNITION
Brand recognition has always been an important pillar of our business, and in FY2024, Food Empire continued to earn accolades for brand excellence. The Group was awarded Gold for Cover Photo/Design and Printing & Production in the Beverage & Food Manufacturer Category at the prestigious Annual Report Competition Awards. CaféPHỐ, our flagship coffee brand, was honoured with the 2024 Top Brand Award by Influential Brands. Additionally, Food Empire was recognised for the 14th consecutive year on Brand Finance's 2024 "Top 100 Most Valuable Singapore Brands" list, ranking 60th.
GIVING BACK TO COMMUNITY
Beyond business performance, our commitment to corporate social responsibility runs deep throughout our organisation. In FY2024, we contributed to various causes in many of our markets.
In Singapore, we co-organised the Starry Night charity dinner with Brands for Good in support of Helping Joy, a charity that restores homes of those in need. It was a heartfelt evening of generosity and compassion.
In India, our Indus Coffee team supported the neighbouring communities by sponsoring the construction of a school, bus stop, reverse osmosis water plants and drainage canal. They also donated computers and printers to government high schools.
In Vietnam, as part of our FES Vietnam initiative, "The Journey of Sharing", employees donated funds, essential goods and medical supplies to May Ngan Orphanage, spending time with the children. They also celebrated the Mid-Autumn Festival with orphaned children, gifting mooncakes and school supplies.
We will continue to seek opportunities to expand our social efforts, ensuring more communities benefit from our support.
APPRECIATION
In closing, I would like to extend my heartfelt gratitude to our dedicated management team and employees, whose hard work and perseverance have propelled our Group's performance. I also want to express my sincere appreciation to our Board of Directors for their guidance, as well as to our customers, partners, and stakeholders for their unwavering support. Most importantly, I thank our shareholders for your immense trust and confidence in our Group.
The Group will continue to seize opportunities, rise above challenges, and blaze a path toward greater prosperity and an even brighter future for Food Empire.
