Food Empire Holdings has reported net profit after tax (NPAT) of US$9.2 million ($12.7 million) for the 1QFY2022, 34.4% higher than NPAT of US$6.8 million in the corresponding quarter last year.

The higher NPAT was due to the higher average selling prices (ASPs), lower selling and marketing expenses, as well as higher share of associated profit despite the higher exchange losses.

Net profit before tax increased by 24.0% y-o-y to US$10.7 million, from US$8.6 million.

Revenue increased by 7.6% y-o-y to US$82.6 million largely due to the contribution from the group’s freeze dry coffee business in South Asia, which began operations in the 2QFY2021.

The group’s revenue by markets saw y-o-y growth, especially in South Asia, which registered a 233.1% y-o-y increase. Russia, Ukraine, Kazakhstan and the Commonwealth of Independent States (CIS) fell 5.5% and 5.8% y-o-y respectively.

See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/capital/results/ntuc-income-reports-premium-growth-fy2021-lower-net-operating-surplus-fair-value?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>NTUC Income reports premium growth for FY2021 but lower net operating surplus on fair value loss</a>

The CIS comprises 11 countries from the former USSR. They are: Armenia, Azerbaijan, Belarus, Kazakhstan, Kirghizstan, Moldavia, Uzbekistan, Russia, Tajikistan, Turkmenistan and Ukraine.

Gross profit dipped 1.1% y-o-y to US$25.5 million.

Gross profit margin fell 2.7 percentage points to 30.9%, while net profit margin increased 2.2 percentage points to 11.1%.

Selling and marketing expenses fell 33.2% y-o-y to US$6.2 million.

See also: <a class='gtm_see_also_2_inread' style='text-decoration: underline;' href='/capital/results/serial-system-reports-lower-1qfy2022-earnings-allowance-obsolete-stocks?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>Serial System reports lower 1QFY2022 earnings on allowance for obsolete stocks</a>

During the quarter, the group logged foreign exchange losses of US$3.2 million, 1,606.3% higher than the US$190,000 posted in the corresponding period in the year before.

EBITDA for the 1QFY2022 stood 21.2% up y-o-y at US$13.3 million.

Looking ahead, the group says it has experienced an overall improvement in market sentiment amid the loosening of social distancing measures and as the pandemic fears recede.

However, it expects the business environment in its Russia and Ukraine markets to remain challenging for the FY2022 due to the ongoing war. Both countries are the group’s key markets.

“The Russian ruble and currencies of neighbouring CIS countries will continue to be affected by international sanctions and have exhibited severe currency volatility in tandem with the ebb and flow of geopolitical developments,” says the group in its May 11 statement.

“In the same vein, the Ukraine economy is destabilised by the effects of war and operating conditions are extremely fluid. Nonetheless, demand remains firm in both markets and the group have implemented a range of measures to mitigate disruptions and ensure business continuity,” it adds.

Outside of Russia and Ukraine, the group says it is continuing to witness an uptick in growth momentum, especially in its Vietnam market, which has seen strong consumer demand.

For more stories about where money flows, <a class='gtm_see_also_3_inread' style='text-decoration: underline;' href='/capital/right-timing/straits-times-indexs-rebound-likely-be-fleeting-further-volatility-lies-ahead?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>click here for Capital Section</a>

In Malaysia, the group’s business sentiment remains “robust”.

In India, the group’s spray dry and freeze dry coffee plants are operating at a high level of capacity utilisation.

Shares in Food Empire closed 4 cents higher or 8.33% up at 52 cents on May 11.

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