Financials
Unaudited Condensed Interim Financial Statements For the six months ended 30 June 2024
Financials Archive
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Interim consolidated income statement
Interim consolidated statement of comprehensive income
Interim balance sheet
Review of Performance
Revenue for the six months ended 30 June 2024 ("1H2024") rose 13.6% to US$225.2 million from US$198.2 million in 1H2023. The Group's net profit after tax was US$23.2 million in 1H2024 as compared to US$26.6 million in 1H2023.
Revenue by Markets (US$'000)
The Group's Russia segment declined by US$2.5 million from US$70.6 million in 1H2023 to US$68.1 million in 1H2024 mainly due to the depreciation of the Russian Ruble against the US dollar. The revenue recorded in local currency terms increased by 13.4% mainly due to the combination of higher volume and higher pricing.
Revenue from the Group's South-East Asia segment rose 34.8% to US$61.8 million in 1H2024 mainly due to strong sales across the markets in this segment. This was mainly driven by higher contribution from the Group's Vietnam market as a result of more intense marketing efforts across all channels resulting in higher sales volume.
The Group's Ukraine, Kazakhstan and CIS segment achieved revenue growth of 15.7% from US$49.5 million in 1H2023 to US$57.3 million in 1H2024. The improvement was driven mainly by higher sales across the segments, particularly from the Group's CIS market in view of higher sales volume and higher pricing.
The Group's South Asia segment recorded revenue growth of 36.0% from US$21.7 million in 1H2023 to US$29.6 million in 1H2024. This was driven by the increase in contribution from both the Group's freeze dry and spray dry coffee plants in India due to higher sales volume coupled with higher pricing in line with the increase in raw material costs.
Profitability
The Group's net profit after tax decreased from US$26.6 million in 1H2023 to US$23.2 million in 1H2024, mainly due to lower profit contribution from the Group's Russia market arising from short term price disruption in the market. This decrease was partly offset by higher contribution from the rest of the Group's segments in spite of higher ingredient prices and higher operating expenses including brand building activities.
For 1H2024, selling and marketing expenses increased by 10.4% to US$17.4 million from US$15.7 million in 1H2023. This was mainly attributed to higher manpower cost, particularly in the Group's Vietnam market.
For 1H2024, general and administrative expenses increased by 13.4% to US$21.8 million from US$19.2 million in 1H2023. The increase was mainly due to higher manpower cost and inventory obsolescence provision.
Balance Sheet & Cashflow
As at 30 June 2024, the Group's inventories increased by US$37.3 million to US$114.0 million. The increased inventory level was to ensure operational continuity due to global supply chain disruptions and geopolitical disturbances.
The Group's trade receivables increased from US$38.2 million to US$46.9 million mainly due to higher sales.
The Group's cash and cash equivalents stood at US$75.8 million as at 30 June 2024, compared to US$131.3 million as at 31 December 2023 mainly due to dividends paid to shareholders in 2Q2024 coupled with higher working capital requirements.
The Group's net assets as at 30 June 2024 were US$279.6 million. The net asset value per ordinary share (excluding non-controlling interests) as at 30 June 2024 was 52.73 US cents as compared to 56.20 US cents as at 31 December 2023.
Commentary
Global markets are facing various challenges including climate change, currency volatility, supply chain disruption, geopolitical tensions and uncertainties in the macroeconomic environment. For the instant beverage industry, these have resulted in higher prices for raw materials. In the Group's Russia market, we are experiencing short term price disruption. Food Empire remains vigilant of any potential impact that these events may have on its business and will continue to conduct periodic reviews and manage its business strategies to mitigate rising raw materials costs.
Despite the tough environment, the Group is cautiously optimistic about the business outlook. The global instant coffee industry is expected to grow at a CAGR of 6.4% from 2023 to reach US$60.7 billion by 2032, mainly driven by higher demand for convenience foods and wider range of product options for consumers.
Food Empire is well positioned to capture this growth with significant projects in the pipeline. In April 2024, the Group completed the expansion of its non-dairy creamer production facilities in Malaysia and expects it to reach full utilisation over the next two to three years. The Group also expects to open a second snack production factory in Malaysia by the first half of 2025. The Group is also currently constructing a coffee mix production facility in Kazakhstan, which would be its first facility in Central Asia when completed by end 2025.
Despite market challenges, the Group expects to maintain its sales performance. It expects its South-East Asia and South Asia segments, which are its fastest growth segments in recent years, to continue on a strong growth trajectory due to the expansion of its production capacities as well as robust consumer demand from emerging economies within these regions.
The Group remains focused on maintaining and growing its market share in its key markets by increasing sales through branding, product development and expanding distribution networks.
