Monde Nissin’s profits fell by more than a fifth in the first quarter as the Philippines group’s problems with UK meat-free business Quorn continued.
In the quarter to the end of March, Monde Nissin saw its net income slide by 21% despite rising sales, which were boosted by its other assets in food.
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The company has seen sales and profits at Quorn, which it acquired in 2015, come under pressure in recent quarters, hit in part by slowing demand for meat-free products in the UK.
Quorn’s performance has led Monde Nissin to record a series of impairment charges.
Reporting first-quarter numbers yesterday (14 May), the group booked net income attributable to equity holders of 2.73bn pesos ($48.9m), down 21.5% on a year earlier.
Monde Nissin cited two charges tied to its meat-alternative business, which is centred around Quorn. It recorded a 290m pesos “non-cash accounting loss on the fair value of the meat alternative guaranty asset” and 69m pesos in costs related to restructuring moves at the UK-headquartered business.
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By GlobalDataThe revenue from Monde Nissin’s Meat Alternative division dropped 3.8% and fell by 5.8% on a constant-currency basis as “category softness continues”, the company said.
The division’s gross profit increased 10.8% to 759m pesos amid lower input costs, reduced inventory and the group’s “supply chain transformation” efforts for the business, it added.
Speaking to analysts after the results were published, Monde Nissin’s management pointed to the performance of Quorn snacking products in the UK, an area the business has been developing.
“In the very, very recent data read, we’re actually seeing increased penetration with UK consumers driven by that focus on Quorn snacking,” Quorn Foods CFO Nick Cooper said.
Asked if the group planned to try to reduce more costs at Quorn, David Flochel, the division’s recently installed CEO, said: “I think we are definitely much on track driving our lean organisation according to our plans on the one end, on the SG&A side. And then we have the whole transformation going on in the supply chain side, which is an ongoing process and execution going on for this year but also next year.
“So, yes, there will be further improvement and we’ll keep looking at the best fit between our focus areas and the organisation to deliver that strategy and the focus areas we want to deliver. Absolutely.”
Monde Nissin’s second division, Asia-Pacific Branded Food and Beverage, reported a 4.1% rise in first-quarter net sales to 17.6bn pesos, helped by higher volumes of biscuits, cakes and culinary products. Noodles sales fell 4.5%.
