Monde Nissin—controlled by tycoon Betty Ang and her family—expects earnings to rebound in the second half after profits tumbled in the six months ended June, hurt by exceptional charges and surging raw material prices.
The company said Thursday net profit slumped 96% to 204 million pesos ($4 million) in the first half due primarily to non-recurring charges related to the redemption of convertible bonds and deferred tax liabilities. Excluding the exceptional items, net profit fell 13% to 4.3 billion pesos as higher prices of key raw materials such as palm oil and wheat dragged gross margins lower.
“The second half is more promising,” Monde Nissin CEO Henry Soesanto said in a virtual media briefing.
For the full year, Monde Nissin said it expects to achieve mid-single digit revenue growth, supported by price increases for its noodles and biscuits as well as sales improvements for alternative meats unit Quorn Foods, which is scaling its distribution network across the U.S.
“High commodity prices are transitory and should be mitigated by price increases as well as efficiency programs in place,” First Metro Securities analyst Estella Dhel Villamiel said in an emailed reply to Forbes Asia. “We continue to expect Monde Nissin to perform better.”
First Metro expects Monde Nissin’s net profit before exceptional items to rise 62% to 11.9 billion pesos this year, with revenue increasing 6.9% to 72.6 billion pesos. Apart from its dominant market share in the Philippine instant noodle and biscuits markets, the brokerage said the group’s alternative meats subsidiary Quorn Foods will be a key growth driver as it scales distribution channels in the U.S.
Quorn’s sales fell 0.6% to 7.5 billion pesos, accounting for 22% of Monde Nissin’s total revenue of 33.8 billion pesos in the first half. The U.K. accounted for 5.9 billion pesos of the sales, while the U.S. had 683 million pesos and the rest of the world 968 million pesos.
“The potential of Quorn in the U.S. is huge,” Soesanto said.
Monde Nissin is placing a huge bet on alternative meats, which it sees as the next growth area. The company acquired Quorn for 550 million pounds ($759.4 million) in 2015 and plans to spend more than half of the 48.6 billion pesos it raised in June from the Philippines’ biggest-ever initial public offering.
The company was cofounded by Ang and the late Indonesian tycoon Hidajat Darmono—whose family owns the Khong Guan biscuit factory in Indonesia—in 1979. Monde Nissin initially manufactured biscuits before branching out into instant noodles in 1989. Today, its Lucky Me! instant noodles has about 70% share of the Philippine market, while its biscuits such as SkyFlakes and Fita account for 31% of the market, according to a survey by Nielsen.
Ang, 66, who is also the president of Monde Nissin, is married to Darmono’s son, Hoediono Kweefanus, 69, who is the company’s vice chairman. Their combined net worth is well above $1 billion based on their total stake in the company.