Monde Nissin income down 46% after product recall

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MONDE NISSIN CORP. posted a P1.55-billion core net income in the third quarter, lower by 46% versus last year, as sales were affected by a product recall in Europe.

“It was the high commodity costs that have been locked in and also the very high manufacturing overhead absorption because of significant reduction in volume,” Monde Chief Financial Officer Jesse C. Teo said, talking about what contributed to the lower results.

“Our pricing action for the year was not enough to offset these two wind pressures that happened during the quarter,” he added in a briefing on Wednesday.

In July, some of Monde’s Lucky Me! noodles were recalled due to traces of antimicrobial pesticide ethylene oxide.

According to Mr. Teo, the actual volume recalled was small at 49 million, however, what made a big impact was the effect on public confidence.

“The PR (public relations) effect on the Philippine business was huge. In July we reported 15% decline, and in August there was an even stronger decline,” Mr. Teo said.

In the three months that ended September, the company’s net sales grew by 0.2% to P17.73 billion.

Sales from its Asia-Pacific branded food and beverage (APAC BFB) segment declined by 0.8% to P13.96 billion. Domestic APAC BFB sales rose by 0.7% to P13.1 billion, as sales in biscuits and other categories offset the decline in noodles.

International revenue declined by 2.3% in the third quarter to P900 million, which the company attributed to a temporary slowdown as it takes measures to ensure global compliance.

Meanwhile, sales from its meat alternative products rose by 4.2% to P3.76 billion on strong volume growth in food service and share recovery in the UK.

The company’s third-quarter core gross profit declined by 22% to P5.44 billion.

“This is primarily due to the raw material and energy cost inflation. Energy and material inflation contributed more than P1.8 billion in upcharge,” Mr. Teo said.

JANUARY-SEPTEMBER SHOWINGFor the nine-month period, attributable core net income dipped by 20.8% to P5.6 billion due to lower gross profit, higher logistical costs, and investments.

Monde’s consolidated revenues grew by 6.7% to P54.9 billion, while core gross profit decreased by 7.1% to P18.2 billion.

Sales from the APAC BFB segment rose by 8.3% to P43.7 billion, which the company attributed to increased prices and volume growth in biscuits and other categories.

Domestic APAC BFB sales grew by 9.2% to P41 billion, while international revenue declined by 4.1% to P2.6 billion.

Meanwhile, Monde’s meat alternative business posted a 0.8% increase in revenue to P11.2 billion.

“Despite a challenging quarter with flat topline growth, we have met significant progress in recovering loss momentum in our noodle business and now our meat alternative business is starting to show strength in the category,” Monde Chief Executive Officer Henry Soesanto said.

“This positive momentum coupled with the fact that our biscuit and other businesses have continued performing very strongly give me some kind of optimism for this current quarter, which is off to a good start,” he added.

Monde is a global food and beverages company headquartered in the Philippines. Its brands include Lucky Me! noodles, Skyflakes crackers, Fita crackers, Monde baked goods, and Quorn meat alternative products.

On Wednesday, shares in Monde lost two centavos or 0.17% to P12 apiece. — Justine Irish D. Tabile