Monde Nissin reported a significant decline in profits during the first quarter, with earnings plummeting by over 20% as challenges persisted in its UK meat-free brand, Quorn.
In the quarter ending March, the Philippines-based company experienced a 21% drop in net income, despite an uptick in sales, largely driven by its diverse food portfolio. This downturn comes as Quorn, acquired in 2015, faces mounting pressure due to decreasing demand for meat-free options within the UK market.
As a result of Quorn’s struggles, Monde Nissin has recorded a series of impairment charges. In its announcement of first-quarter results on May 14, the company reported net income attributable to equity holders of 2.73 billion pesos ($48.9 million), marking a decline of 21.5% from the previous year.
Monde Nissin attributed two significant charges to its meat-alternative segment, particularly Quorn. Notably, the company incurred a 290 million peso non-cash accounting loss related to the fair value of its meat alternative asset and an additional 69 million pesos tied to restructuring efforts in the UK operations.
The revenue generated by Monde Nissin’s Meat Alternative division decreased by 3.8%, or 5.8% on a constant-currency basis, as the company noted “category softness continues.” Despite this decline, the division’s gross profit rose by 10.8% to 759 million pesos, thanks to lower input costs and reduced inventory, alongside the group’s ongoing supply chain transformation initiatives.
During the analyst call that followed the earnings release, Monde Nissin’s leadership highlighted the positive trends in Quorn’s snacking products. CFO Nick Cooper shared insights: “In the very, very recent data read, we’re actually seeing increased penetration with UK consumers driven by that focus on Quorn snacking.”
When questioned about potential cost reduction strategies at Quorn, David Flochel, the division’s newly appointed CEO, stated, “I think we are definitely much on track driving our lean organization 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 for this year but also next year.”
Flochel further emphasized, “So, yes, there will be further improvement, and we’ll keep looking at the best fit between our focus areas and the organization to deliver that strategy and the focus areas we want to deliver. Absolutely.”
Turning to Monde Nissin’s second division, Asia-Pacific Branded Food and Beverage, a 4.1% increase in first-quarter net sales was reported, amounting to 17.6 billion pesos. This growth was propelled by higher sales volumes of biscuits, cakes, and culinary products, although noodle sales experienced a decline of 4.5%.
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