Monde Nissin Corp., known for its popular brands like "Lucky Me!" noodles and "Sky Flakes" biscuits, announced a significant financial setback for the year 2022. The company reported a net loss of P13.01 billion, a sharp contrast to the previous year's income of P3.24 billion. The primary culprit behind this financial downturn was identified as its veggie meat business.
Impairment of Intangible Assets Hits Bottom Line
The Philippines-based food conglomerate disclosed that it incurred a non-cash, non-operating impairment of the intangible assets related to Marlow Foods. Marlow Foods is the parent company of Quorn and Cauldron, two prominent brands within Monde Nissin's alternative meat business.
Despite the financial setbacks, Monde Nissin managed to achieve overall revenue growth in 2022. The company's revenues increased by 6 percent, reaching P73.9 billion compared to the previous year's P69.28 billion. A significant factor contributing to this growth was the recovery of its noodles segment within the domestic market.
Strong Q4 Performance
The fourth quarter of 2022 proved to be particularly promising for Monde Nissin. During this period, the company recorded close to a 12 percent growth in sales, totaling P20 billion. However, the net income for the quarter experienced a decline of 10 percent, settling at P958 million.
Monde Nissin's Asia-Pacific branded food and beverage division reported robust performance, with net sales increasing by 8 percent to P58.6 billion. This growth was primarily driven by price increases across all categories, alongside impressive volume growth in biscuits, beverages, and culinary products.
The domestic business in the Philippines grew by 9 percent year-on-year, reaching P55 billion in 2022. This growth was attributed to the segments of biscuits, beverages, and culinary surpassing pre-pandemic levels and a substantial recovery in the noodles segment.
International Revenue Challenges
In contrast, the international revenue of Monde Nissin declined by 4 percent to P3.5 billion. This dip was primarily due to temporary slowdowns resulting from strengthened global compliance measures.
Monde Nissin's meat alternative segment experienced flat revenues on an organic basis. This performance was influenced by price increases, substantial growth in the foodservice sector, and market share gains in the United Kingdom retail business.
Quorn, a leading player in the veggie meat market, displayed resilience. Retail sales faced challenges but still managed to grow by 1.4 percent in the UK, while the rest of the world (ROW) achieved a remarkable 5.4 percent growth on an organic basis for the full year. Furthermore, the foodservice sector saw impressive growth, with a 51.5 percent year-on-year increase for the entire year.
Core Gross Profit and Margin Challenges
The company reported a decrease in core gross profit for the full year, falling by 17 percent to P5 billion. The core gross margin also declined by 710 basis points, reaching 32.5 percent. These declines were attributed to the dilutive effect of price increases versus inflation, lower volume, and higher overhead costs.
While Monde Nissin faced significant challenges in 2022, the company's strategic outlook remains focused on navigating these obstacles and continuing its growth trajectory in key market segments.