Monde Nissin posts higher Q1 sales, but warns global food crisis looms due to Ukraine war

Art Fuentes, ABS-CBN News

Posted at May 11 2022 08:14 PM | Updated as of May 11 2022 08:23 PM

MANILA - Processed food giant Monde Nissin released its unaudited first quarter results showing the company's consolidated revenues grew 7.2 percent on the back of strong domestic sales. 

Henry Soesanto, president of Monde Nissin, however also warned that a food crisis still loomed due to the Ukraine-Russia war. 

The company behind Lucky Me and Skyflakes said that while consolidated revenues grew to P18.3 billion in the first quarter on the strong performance of its Asia Pacific branded food and beverage business, net income declined as input costs also grew. 

"Core net income attributable to shareholders for the quarter saw a decrease of 13.5 percent to P2.1 billion, while reported net income ended almost unchanged at P2.3 billion, benefiting from lower interest expense due mainly to the repayment of the Arran convertible note and bank loans in 2021," the company said. 

Jesse Teo, Monde Nissin’s chief financial officer, said the company was affected by higher input costs.

“Commodity costs continue to increase fast and steep,” Teo said. 

Palm oil and wheat, which constitute up to 45 percent of the company’s raw material costs, have both gone up, he said. Wheat prices shot up due to the Ukraine war, while palm oil costs surged after major producer Indonesia banned exports of the commodity.

 

But Monde Nissin was able to stem input costs through forward contracts. While the contract prices of these commodities are still significantly higher than last year’s, they are also significantly lower than spot prices, Teo said. 

Meanwhile, Soesanto said the war in Eastern Europe means that a food crisis still loomed globally, as Ukraine and Russia together account for 30 to 40 percent of the global wheat supply, and up to 40 percent of the world sunflower oil supply.

“Even if the war stopped today, they will have to start to plant again,” Soesanto said. 

He said the most marginalized countries, especially those in Africa, will be the most affected by the food crisis. 

Meanwhile, despite the challenging business climate, Soesanto said the company remains optimistic about this growth prospects.

"We are working hard to continually improve our efficiency and being mindful of our consumers when price increases become warranted, striving to maintain our growth momentum and recovering margin where possible," Soesanto said. 

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