GuruFocus -
- Revenue Growth: Net sales improved by 4.2% in Q2, bringing the first half to 3.1% growth.
- Gross Margin: Expanded by 370 basis points in Q2 and 460 basis points for the first half.
- Core Net Income: Increased by 37% in Q2 and 46% for the first half.
- Cash Improvement: Cash improved by 78.2% to PHP6 billion in the first half.
- APAC Branded Food and Beverage Gross Margin: Expanded by 410 basis points in Q2 and 580 basis points for the first half.
- Noodles Sales Growth: Increased by 8.3%, with a 10% growth in volume.
- Meat Alternative Sales: Underlying sales down about 9% in Q2.
- Meat Alternative Gross Margin: Core gross margin of 23.1%, up 146 basis points year on year and 313 basis points quarter on quarter.
- Core EBITDA for Meat Alternative: Posted a loss of PHP84 million in Q2.
- Foodservice Business Growth: Sales per day increased by 8%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Monde Nissin Corp (PHS:MONDE) reported a strong core profit improvement of 37% for the second quarter and 46% for the first half.
- The APAC branded food and beverage segment showed significant growth, particularly in the noodles and others category, with noodles growing 8.3% in sales.
- Gross margin expanded by 370 basis points in the second quarter and 460 basis points for the first half, driven by lower input costs.
- The company improved its cash position by 78.2% to PHP6 billion in the first half.
- Monde Nissin Corp (PHS:MONDE) launched Monde Nuvi, a new chocolate milk drink with nata de coco sinkers, aiming to capture a share of the PHP9 billion chocolate milk market.
- The meat alternative segment faced continued top-line challenges, with underlying sales down about 9% at constant exchange rates.
- APAC BFB gross margin declined 200 basis points quarter over quarter due to factors like exchange rate fluctuations and supply chain issues.
- The biscuits category experienced supply chain hiccups, leading to a slight share dilution from 28.5% to 28.4%.
- The UK retail market for meat alternatives continued to decline, impacting sales and market share.
- Monde Nissin Corp (PHS:MONDE) revised its 2024 CapEx budget downward due to delays in construction and machine delivery.
A: Jesse Teo, Chief Financial Officer, explained that the EBITDA margin is expected to be closer to Q2 levels than Q1. This is due to increased A&P investments and one-off costs like collective bargaining bonuses, alongside the impact of the USD-Philippine exchange rate.
Q: Why did APAC BFB gross margin decline 200 basis points quarter over quarter despite no spike in key raw materials?
A: Jesse Teo noted that the decline was due to the exchange rate impact, one-off costs such as collective bargaining bonuses, and supply chain issues with the SkyFlakes brand, which affected production efficiency.
Q: Can you comment on the trends in noodle sales volumes, particularly in May and June?
A: Jesse Teo mentioned that noodle sales growth slowed in May and June after the Holy Week effect in April, but overall, noodles grew 10% in volume for Q2.
Q: How is Monde Nuvi priced compared to key chocolate milk competitors like Chuckie and Choc-O?
A: Monde Nuvi is positioned as an affordable premium product, slightly more expensive due to its unique feature of having nata de coco sinkers.
Q: What led to the faster growth in consolidated core EBITDA in the second quarter compared to gross profit?
A: Jesse Teo did not have an immediate answer and promised to follow up on this question.
Q: What was the supply chain issue in biscuits, and how was it addressed?
A: Jesse Teo explained that there was an unscheduled machine breakdown, which was fixed after a couple of weeks.
Q: What indicators are you monitoring for improved demand in meat alternatives, and do you foresee sustained volume declines?
A: Marco Bertacca, CEO of Quorn Foods, stated that they are monitoring the UK retail environment and consumer confidence. They expect some pressure on volume this year and possibly next year but are optimizing their footprint to strengthen future performance.
Q: Can you remind us of the top-line contribution of noodles and biscuits to APAC BFB?
A: Jesse Teo stated that noodles contribute about 47%, biscuits 32%, beverage 11%, and culinary 6% to APAC BFB.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.