- Revenue increases 14.0% to HK$3,518.8 million
- Achieves record-high net profit of HK$301.9 million
Nissin Foods Company Limited (HKG:1475) has today announced its annual results for the year ended 31 December 2020.
Revenue of the Group increased by 14.0% year-on-year (YoY) to HK$3,518.8 million (2019: HK$3,087.8 million), primarily due to the satisfactory performance of both the instant noodles and frozen foods businesses in Hong Kong as a result of the recurring waves of the pandemic, as well as the surge in demand for instant noodles in the PRC especially during the first half year. In addition, the joint venture distribution business commenced operation in April 2020 and has contributed to the revenue as at the year.
The Group’s EBITDA grew by 25.2% YoY to HK$570.0 million (2019: HK$455.4 million) and EBITDA margin increased to 16.2% (2019: 14.7%). Profit attributable to owners of the Company increased by 20.3% YoY to HK$301.9 million (2019: HK$251.0 million), representing a net profit margin of 8.6% (2019: 8.1%). The Group’s profitability has improved substantially as a result of the boost in sales among its operating regions and better control of operating and non-operating expenses.
Basic earnings per share increased to 28.11 HK cents (2019: 23.36 HK cents) for the year. The Board has resolved to propose a final dividend of 14.05 HK cents per share (2019: 11.7 HK cents), representing a dividend payout ratio of 50.0% (2019: 50.1%).
Hong Kong Operations
Revenue from the Hong Kong operations increased by 9.1% YoY to HK$1,418.4 million (2019: HK$1,299.8 million), due to the surge in sales of instant noodles and frozen food, as customers stocked up on food items with longer shelf life and which are easier to prepare. Segment results increased dramatically by 65.5% YoY to HK$165.5 million (2019: HK$100.0 million), mainly due to an upsurge in sales from the instant noodles and non-noodles businesses and better control of cost of sales and selling expenses during the year.
With respect to the instant noodles business, the Group has been optimising its product portfolio by launching a series of new products to promote product price optimisation and product upgrade. This is particularly evident in the Group’s signature brand “DEMAE ICCHO” which recorded encouraging growth in sales amid the pandemic. Aside from its original offerings, the Group launched Hokkaido Wheat Flour Sesame Oil Flavour Demae Iccho in July 2020. With “CUP NOODLES”, the Group further expanded its Western-style flavour collection as well as its Southeast Asian-style flavour collection. Furthermore, the Group has also launched novel offerings under the “UFO”, “RAOH”, “FUKU” and “DOLL” brands, as well as non-fried noodles under the Bar Ramen and Bar Udon, in order to expand the taste collection for customers amid this difficult time.
On the other hand, the Group has consistently diversified its product portfolio, extending to the non-noodles business to expand its product offerings and increase growth in Hong Kong. The Group’s strategic moves proved to be a clear success in 2020 despite the impact of COVID-19. Its “DOLL” brand of products were well received by customers for their convenience, and its “KAGOME” brand also performed well due to its advocacy of healthiness. The Group further introduced a new Strawberry Granola for its granola business to enhance its product collection.
In addition, the Group invested approximately HK$7.1 million in establishing a pre-packaged ready-to-eat fresh-cut vegetables production line in Hong Kong, so as to cater for the needs of health-conscious customers. The Group also made a capital injection of approximately HK$6.0 million in ValleyFarm Holdings Limited in August 2020. The funds will be used to invest in an indoor hydroponic farm in Hong Kong. The Group foresees a favourable outcome from the vegetable business in the coming years.
PRC Operations
Revenue from the PRC operations increased by 17.5% YoY (in local currency: 18.6%) from HK$1,788.0 million in 2019 to HK$2,100.4 million for the year, due to the surge in demand for instant noodles during the first half year. This marks the third consecutive year that the Group has achieved double-digit revenue growth for a full financial year, thus underscoring the Group’s track record of success and commitment to its long-term growth in the PRC. Also contributing to revenue growth is the new joint venture distribution business in Shanghai which commenced operation in the second quarter of 2020. Segment results increased by 17.4% YoY to HK$247.1 million (2019: HK$210.6 million), mainly due to the solid performance of the instant noodles business, as well as the additional contribution from the new joint venture distribution business in Shanghai.
The Group has continued its geographical expansion efforts, developing in key regions of the PRC during the year, which is in line with its aim of achieving sustainable growth. By investing in infrastructure and people, the Group has delivered satisfactory performance from its “CUP NOODLES” brand and results was especially encouraging for the made-in-Hong Kong “DEMAE ICCHO” brand in its key operating regions in Eastern and Southern China. Further investments were made in Western and Northern China as the Group further expanded its geographical coverage.
Besides, the strategic investment of the new joint venture distribution business in Shanghai enabled the Group to further strengthen its business foundation in Eastern China, as well as creating synergy with the Group’s current distribution channels as it further expands its business in the PRC. The Group currently distribute a number of famous Japanese brands of snacks food and beverages in the PRC.
Prospects
Looking ahead, the Group will continue to make timely adjustments to its production capacity for instant noodles and frozen foods so as to meet customers’ needs. For the PRC operations, the Group will further conduct research and development on production as well as strive for product innovations that deliver value to its customers. The Group will also continue expanding its business coverage in the PRC to achieve sustainable growth in the long run. At the same time, efforts will be made to closely monitor and control operating costs.
Mr Kiyotaka ANDO, Executive Director, Chairman and Chief Executive Officer of Nissin Foods, said, “The year 2020 will be remembered as one of the most challenging periods in recent history due to the outbreak of COVID-19. Nevertheless, our dedication to ensuring the steady supply of food to both Hong Kong and the PRC has resulted in the resilient performance of the Group throughout the year. What’s more, Nissin Foods has been selected for inclusion in a number of Hang Seng Indexes, thus highlighting the capital market’s recognition of our performance and business outlook. Going forward, we will continue to strengthen our overall competitiveness and look for new initiatives to optimise our product mix and broaden our existing product portfolio, in order to satisfy the growing market demand and create long-term value for our stakeholders.”
For complete information, please refer to the Company’s Annual Results Announcement available on
the Hong Kong Stock Exchange website at:
https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0318/2021031800371.pdf
About Nissin Foods Company Limited
Nissin Foods Company Limited (The “Group”; Stock code: 1475) is a renowned food company in Hong Kong and the PRC 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 PRC market, the Group has introduced technology innovation through the “ECO Cup” concept into the market and primarily focuses its sales efforts in first-and second-tier cities located in the eastern and southern parts of the PRC.
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.