Nissin Foods Announces 2022 Interim Results

by ACN Newswire

HONG KONG, Aug 30, 2022 - (ACN Newswire) -  Nissin Foods Company Limited ("Nissin Foods" or the "Company", together with its subsidiaries, the "Group"; Stock code: 1475) has today announced its interim results for the six months ended 30 June 2022 ("the reporting period").

Highlights
-- Revenue from the Hong Kong operations increased solidly by 11.4% year-on-year to HK$759.9 million, mainly attributable to the strong demand for instant noodles and frozen food products driven by the hoarding behaviour of consumers. Revenue from Mainland China operations increased by 8.7% to HK$1,273.2 million, thanks to the growth in sales volume of cup-type instant noodles.

-- In the face of rising production costs and raw material prices, Nissin Foods will implement the second phase of its price adjustment strategy in Hong Kong, for the products that were not included in the first phase implemented in April 2022. Their ex-factory price will be adjusted upward by a high single-digit percentage on average, starting from September 2022.

-- "Nissin Foodium", Nissin's inaugural membership programme for Hong Kong and Mainland China has been launched respectively in July and August 2022. The "Nissin Foodium" in the WeChat Mini Program offers the members a series of exclusive benefits, exciting rewards and interactive games.

The Group's revenue increased by 9.7% year-on-year ("YoY") to HK2,033.1 million (2021: HK$1,853.8 million). The Group's EBITDA grew by 8.4% YoY to HK$305.1 million (2021: HK$281.3 million), representing an EBITDA margin of 15.0% (2021: 15.2%). Profit attributable to owners of the Company amounted to HK$164.9 million (2021: HK$170.9 million). The Group's basic earnings per share was 15.80 HK cents (2021: 15.94 HK cents).

Hong Kong Operations
Revenue from the Hong Kong operations increased solidly by 11.4% YoY to HK$759.9 million (2021: HK$682.2 million), mainly attributable to the strong demand for instant noodles and frozen food products driven by the hoarding behaviour of consumers. Segment results amounted to HK$50.0 million (2021:HK$52.6 million), owing to the higher-than-usual production and logistics costs that occurred during the fifth wave of the pandemic. Revenue from the Hong Kong operations accounted for 37.4% (2021: 36.8%) of the Group's revenue.

The improvement in the performance of both cup-type and bag-type instant noodles was obvious, as consumers were more inclined to stay at home. To further complement its instant noodles portfolio, the Group launched various new flavours under the "Roah", Nissin "U.F.O." and "Fuku" brands. Frozen food products also demonstrated a strong demand due to the resurgence of the pandemic in Hong Kong. For the "KAGOME" business, plant-based soy and oat milks were launched to promote nutritious and healthy choices to health-conscious consumers. The Group replicated the success of granola in Greater China in new markets in Southeast Asia. The sales volume grew considerably in Singapore and Thailand during the first half of the year. The fresh-cut vegetable business has seen growing demand, and the distribution channels have further expanded from supermarkets to restaurants.

Mainland China Operations
Revenue from the Mainland China operations increased by 8.7% (in local currency: 8.4%) to HK$1,273.2 million (2021: HK$1,171.6 million) thanks to the growth in sales volume of cup-type instant noodles as consumers continued to favour higher-quality products, offset by a drop in the distribution business. Segment results increased favourably by 14.1% to HK$165.9 million (2021: HK$145.4 million), mainly attributable to the sound performance of organic revenue growth, coupled with the price adjustment implemented during the period. Revenue from the Mainland China operations accounted for 62.6% (2021: 63.2%) of the Group's revenue.

As with "Cup Noodles" in Hong Kong, the Company has been upgrading the product in Mainland China to feature smoother noodle texture and a thicker soup base since May 2021. A positive response was received from customers, with the sales volume continuously expanding during the period under review. Also, the Company continued its geographical business expansion strategy in Mainland China and explored certain new markets in the Western and Northern regions of China. Leveraging its diversified product portfolio, it seized the opportunity to promote other product categories such as frozen pasta and ramen during the lockdown in Shanghai due to resurgence of COVID-19, and the sales volume of these products was considerably broadened as a result.

Prospects
The Group is cautiously optimistic about the long-term business development in the regions in which it operates and will continue to explore ways to better alleviate the cost pressure amid this competitive landscape. While the high prices of key raw materials such as wheat flour and palm oil are starting to decline, there remains a veil of uncertainty over the future outlook of the business environment considering the rising risk of worldwide stagflation.

In Hong Kong, the cost pressure has not yet been fully released. In the face of rising production costs and raw material prices, the Group will implement the second phase of its price adjustment strategy for the products that were not included in the first phase implemented in April 2022, with an average increase of a high single-digit percentage to the ex-factory price, starting from September 2022.

Furthermore, a new membership programme designed to strengthen the connection with consumers and bring them enjoyment has been launched in both Hong Kong and Mainland China in July and August 2022, respectively. The "Nissin Foodium" in the WeChat Mini Program offers members a series of exclusive benefits, exciting rewards and interactive games. To enjoy additional benefits and surprises, consumers are encouraged to scan the unique QR code on the products by using the mini program and complete various tasks to earn points. It aims to enhance the Group's customer retention rate, boost product sales and better understand consumer preferences.

Building on a solid foundation, well-diversified product portfolio and the premiumisation strategy pursued, the Company is well-positioned to deliver continuous revenue and earnings growth, as well as expand business territories with increasing brand recognition in Hong Kong and Mainland China for the years ahead.

Mr Kiyotaka ANDO, Executive Director, Chairman and Chief Executive Officer of Nissin Foods, said, "Despite the challenging conditions arising from increasing raw material prices, the Group has achieved solid revenue growth in both Hong Kong and Mainland China for the first half of this year. Thanks to the continuous support from customers in both Hong Kong and Mainland China, our products are able to sustain the growth momentum. We are dedicated to pursuing a premiumisation strategy and providing good quality food to bring contentment and an enjoyable experience to our valuable consumers. 'Nissin Foodium' is our first membership programme and part of our efforts to enhance consumer experience and strengthen our connection with them. Leveraging our research and production capabilities, as well as our management and marketing expertise, we will continue to invest in our products, people and production, so as to strengthen our overall competitiveness and ensure sustainable growth."

About Nissin Foods Company Limited
Nissin Foods Company Limited (The "Group"; Stock code: 1475) is a renowned food company in Hong Kong and Mainland China with a diversified portfolio of well-known and highly popular brands and the largest instant noodle company in Hong Kong. The Group officially established its presence in Hong Kong in 1984. The Group primarily manufactures and sells instant noodles, frozen foods and other food products under its two core corporate brands, namely "NISSIN" and "DOLL" together with a diversified portfolio of iconic household premium food brands. The Group's five flagship product brands, namely "Cup Noodles", "Demae Iccho", "Doll Instant Noodle", "Doll Dim Sum" and "Fuku" are also among the most popular choices in their respective food product categories in Hong Kong. In the Mainland China market, the Group has introduced technology innovation through the "ECO Cup" concept and primarily focuses its sales efforts in first-and second-tier cities.

Nissin Foods is a constituent of eight Hang Seng Indexes, namely: Hang Seng Composite Index, Hang Seng Consumer Goods & Services Index, Hang Seng Stock Connect Hong Kong Index, Hang Seng Stock Connect Hong Kong MidCap & SmallCap Index, Hang Seng Stock Connect Hong Kong SmallCap Index, Hang Seng SCHK Mainland China Companies Index, Hang Seng SCHK ex-AH Companies Index, and Hang Seng Small Cap (Investable) Index. For more information, please visit www.nissingroup.com.hk.


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