FOOD EMPIRE: US$21 m core net profit in FY17, stability returns

The core net profit Food Empire earned in 2017 (US$21.0 million) matched that in 2012 (US$20.5 million). 

Food Empire executive chairman Tan Wang Cheow is flanked by CEO Sudeep Nair (right) and CFO William Fong. File photo.That's a yawn-inducing intro you'd think?

But the business has been anything but boring.

In the intervening four years, Food Empire's earnings turned down, then turned bloody red, and then recovered.

This was in tandem with the plunge and and partial recovery of the price of oil, which affected key economies (and notably their currencies) where Food Empire operates.

In those years, Food Empire executed strategic initiatives which put it on a strong footing for recovery -- and, more importantly, lifted it to another level of recurring earnings: 

♦ Food Empire reported US$29 million in pre-tax earnings for 2017.

♦ Operating cashflow in 2017 was US$29.9 million versus US$17.7 in 2016 (and US$24.4 million in 2012).

♦ Food Empire sat on cash of US$42.8 million at end-2017.

During the oil crisis years, Food Empire grappled with the effects of extreme currency weakness in its core markets of Russia, etc, but finally found its mojo in Vietnam, particularly. Sales there shot up with its Cafe Pho coffee. 

3-in-1 coffee under the MacCoffee brand of Food Empire being packed. NextInsight file photoAnd it invested upstream for the first time -- which again effectively diversified its exposure to Russia, etc.

It built factories in Johor and India to produce raw materials (non-diary creamer and instant coffee) to feed its 3-in-1 coffee packaging plants in places like Russia. 

In Johor also, Food Empire built a plant to produce potato chips for third parties as well as for its own brand, Kracks.

Food Empire

Share price:
$0.69

Target: 
$1.00

Source: RHB Research