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Executive Chairman’s Message
Dear Valued Shareholders,
The global economy had another difficult
year in 2013. The advanced economies
grew modestly whilst many emerging
markets experienced a slowdown.
The general consensus is that economic
performance will improve modestly in
both advanced and emerging markets
for 2014. As an international company in
the food and beverage sector, our Group
is not immune to both economic and
political issues globally. Notwithstanding
challenging conditions, we will continue
to forge ahead and stay vigilant in these
tough times ahead.
Financial overview
We achieved strong revenue growth in our
core markets, despite intense competition,
because of our commitment to brand
building. The loyalty our consumers have
for our brands is cultivated over many
years and it underpins the success of
our business. Going forward, we will
continue to work to enhance the value of
our brands even as we focus our efforts to
develop new markets in Asia, the Middle
East and Africa.
The Group had a challenging time in 2013.
Although our revenue increased 10.6%
year-on-year (“yoy”) to US$262.9 million in
FY2013, we reported a lower profit after tax
of US$11.3 million in FY2013, as compared
to US$20.2 million in FY2012. Profitability
was down due to various factors, including
increase in advertising and promotion
activities, increased staff costs, foreign
exchange losses, investments in new
markets and the start-up costs associated
with our green-field projects.
Since the beginning of 2014, the Group has
seen sharper currency volatility in the Ruble
due to the decision by the Russian Central
bank to adopt a more flexible currency
stance to boost export competitiveness.
Similarly, the Ukrainian Hryvnia and
Kazakhstani Tenge have also devalued
due to political crisis and market pressure.
The standoff between Russia and Ukraine
and the West is also not helping the
situation. As the Group is economically
exposed to these markets, a prolonged
and significant devaluation of their
currencies would affect the Group. The
Group is monitoring the situation closely
and confident that logic finally will prevail
over emotions and life will go on. The
Group has seen the ups and downs of the
CIS (The Commonwealth of Independent
States) and we will manage the situation as
it pans out.
Brand recognition
In view of the Group’s dynamic
operating environment, the Group has
to continuously invest to build its brand
equity and new capabilities so as to ensure
resiliency in a competitive landscape.
In May 2013, Food Empire has emerged as
one of Singapore’s top SGX-listed brands
in 2013; ranking in at 64, an improvement
from 67 and 94 in 2012 and 2011
respectively, among the top 100 SGX-listed
companies by Brand Finance, the world’s
leading independent brand valuation
consultancy. Based on Brand Finance’s
review of our portfolio of brands, our key
brands have been assigned a total value of
US$174.8 million, while the valuation of our
proprietary flagship brand “MacCoffee” has
risen to US$139.7 million in 2013, up from
US$110.1 million in 2007.
Apart from our strong corporate brand, our
product brands are equally recognized and
lauded. Our flagship brand, MacCoffee
was awarded the Golden award in the
‘Coffee Drink’ category of the annual
‘Top Popular Brand’ contest held in
Russia on 25 October 2013. This is a
strong recognition of the affection the
Russian consumers have for the brand
and product. It was in 1994 that we first
conceptualized the MacCoffee brand
and this year we are celebrating its 20th
birthday. Yes, MacCoffee is 20 years older
and more popular and we will have to work
harder to maintain our customers’ loyalty.
In August 2013, our 2012 Annual Report
was named as the Grand Award winner
in the Best of International - Asia Pacific
category, and it swept six Awards at
the 27th International ARC Awards.
The ARC Awards, established by
US-based MerComm Inc in 1987, is
a globally recognized platform that
honors exceptional and high standards
in the corporate Annual Reports.
Building for the future
In the past, the Group also witnessed
unrelenting commodity pricing despite
Food Empire Holdings Limited Annual Report 2013
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