Monde Nissin Corp., the listed food manufacturing giant behind local household staples such as Lucky Me! and Skyflakes, said it was mitigating price increases to customers as surging inflation remained a drag on earnings.
Henry Soesanto, Monde Nissin’s CEO, said these measures included hedging their costs and increasing the supply buffer of key raw materials. Even then, further price hikes appeared “probable,” he said.
“There is only so much that can be done through supply chain efficiencies, after which there is a mathematical inevitability that we will need to pass on cost increases to our consumers,” Soesanto said in a statement.
“However, as I have commented before, we are always mindful that our consumers are also hurting due to current inflationary pressures,” he added.
Inflation was compounded by the geopolitical crisis triggered by Russia’s invasion of Ukraine. This raised the supply risk of commodities and raw materials such as wheat, egg binders and sunflower oil that were also used in the meat alternative business via Quorn, briefing materials from the company showed.
Monde Nissin disclosed on Thursday that full-year net sales rose 2 percent to P69.28 billion while core profits last year dropped 5.4 percent to P8.19 billion as margins declined due to higher costs of materials, apart from advertising and promotion expenses.
Nearly 77 percent of sales came from its Asia-Pacific branded food and beverage (APAC BFB) while the rest came from the meat alternative segment.
Core earnings before interest, taxes, depreciation and amortization fell 15.2 percent to P13.19 billion while margin for core earnings before interest, taxes, depreciation and amortization dropped to 19 percent from 22.9 percent last year.
Despite slower growth, Soesanto said the company remained committed to food security and providing customers with more sustainable meat alternatives.
“Increased global warming and acute commodity inflation show our aspiration to create sustainable food security solutions is more important than ever. Our conviction in Quorn’s production of protein and our determination to play a role in development of the overall category continues,” he said.
“Meanwhile, our new production facility in Southern Luzon, which will also produce our lower oil content noodles, will help us address continued strong demand in our APAC BFB,” he added.