Food Empire Holdings Limited Annual Report 2014
13
OPERATIONS REVIEW
FINANCIAL PERFORMANCE
For FY2014, the Group recorded a net loss of US$13.6
million as compared to a profit after tax of US$11.3
million in FY2013 mainly due to the substantial
depreciation of the currencies of its two largest markets,
Russia and Ukraine against the US dollar which is the
Group’s reporting currency.
In FY2014, sales to the Group’s largest region, Russia,
decreased by 10.6% to US$136.7 million compared
to US$152.9 million in FY2013 due to weakening
of Russian Ruble against US dollar. In the Group’s
Ukraine region, sales declined by 24.4% from US$35.3
million in FY2013 to US$26.7 million in FY2014 due to
weakening of Ukrainian Hryvnia against the US dollar. In
the Group’s Kazakhstan region and CIS countries, sales
increased by 0.9% from US$47.9 million in FY2013 to
US$48.4 million in FY2014. Sales to the Group’s Other
Markets grew by 41.3% from US$26.7 million in FY2013
to US$37.8 million in FY2014. The robust performance
was underpinned by a significant increase in beverage
sales in South East Asia which accounted for over 50%
of the growth. An uptick in sales was also recorded
in Europe, China and the Middle East. Our non-dairy
Kracks promotional giveaway in Kazakhstan supermarket
creamer plant and snack factory in Malaysia, which
commenced commercial production during FY2014,
has yet to contribute meaningfully to Group Sales.
The ongoing political uncertainty in two of the Group’s
key markets, Russia and Ukraine continued to weigh
negatively on the exchange rate of the Russian Ruble
and Ukrainian Hryvnia against the US dollar.
Apart from foreign exchange losses, the net loss was
also due to the following: -
1.
Staff costs increased due to higher salaries and
higher headcount arising from restructuring of our
Russian operation and newly set up factories.
2.
One-off provision for staff compensation due to
corporate restructuring.
3.
Costs associated with investments in new markets.
4.
Start-up costs associated with the Group’s upstream
projects.
5.
Impairment loss charge on the Group’s brand -
Petrovskaya Sloboda.
“THE ONGOING POLITICAL UNCERTAINTY
IN TWO OF THE GROUP’S KEY MARKETS,
RUSSIA AND UKRAINE CONTINUED TO
WEIGH NEGATIVELY ON THE EXCHANGE
RATE OF THE RUSSIAN RUBLE AND
UKRAINIAN HRYVNIA AGAINST THE
US DOLLAR.”
