The Straits Times Index (SGX: ^STI) has been on a tear this year, attaining a 17-year high as it delivered a stunning performance.
However, not all stocks fared well.
Several companies in the food and beverage (F&B) sector met with challenging conditions that caused their share prices to get beaten down for the year.
We take a closer look at four such businesses to try to determine if they could be positioned for a better 2025.
Delfi Ltd (SGX: P34)
Delfi manufactures and distributes consumer products that are sold in over 17 markets including Indonesia, Singapore, Malaysia, and Hong Kong.
The group is well-known for its flagship chocolate brands SilverQueen and Ceres in Indonesia along with Delfi.
Delfi’s share price has skidded 28% year-to-date (YTD) to close at S$0.80, down sharply from its 52-week high of S$1.17.
The company provided a business update for the third quarter of 2024 (3Q 2024).
Performance was lacklustre, with sales falling by 5.5% year on year to US$117.6 million for the quarter.
Gross margin also fell by two percentage points to 26.4%.
The weaker result was because of weaker regional currencies (especially the Indonesian Rupiah), and the effects from the termination of an agency brand in 3Q 2023.
Gross margin was negatively impacted by sharply-higher cocoa prices that have raised the company’s cost of goods sold.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) tumbled by 31.7% year on year to US$8.8 million.
Despite the lower profit, Delfi managed to generated a higher free cash flow of US$19.8 million for 9M 2024, above the US$18 million churned out in the prior year.
Management expects the business to continue facing inflationary pressures in 2025 along with high cocoa prices and persistent supply chain disruptions.
Nevertheless, the group is confident of navigating these headwinds with its portfolio of leading brands and extensive distribution capabilities.
Food Empire (SGX: F03)
Food Empire is a food and beverage manufacturer with a portfolio comprising instant beverages, snack foods, and food ingredients.
The group’s products are sold in over 60 countries and Food Empire owns eight manufacturing facilities in five countries.
Shares of the instant coffee manufacturer have tumbled by 12.8% YTD and are close to their 52-week low of S$0.95.
For the first half of 2024 (1H 2024), the group reported a mixed set of earnings with revenue rising 13.6% year on year to US$225.2 million.
Net profit, however, tumbled by 12.8% year on year to US$23.2 million because of higher manpower cost and lower profit contribution from the group’s Russian market.
For its 9M 2024 business update, Food Empire reported a healthy 12.8% year-on-year increase in revenue to US$344.3 million.
The better result was because of Vietnam, which is now the group’s fastest-growing market.
Food Empire will receive a capital injection of US$40 million from Ikhlas Capital as part of a strategic partnership to develop and expand its Southeast Asia and South Asia segments.
Back in September, the group also committed to invest US$80 million in a new freeze-dried soluble coffee manufacturing plant in Vietnam.
This facility will be completed by 2028 and position Food Empire to become one of Asia’s major players in the freeze-dried soluble coffee space.
Japan Foods (SGX: 5OI)
Japan Foods is a leading Japanese restaurant operator in Singapore and operates 84 restaurants under brands such as Ajisen Ramen and Menya Musashi as of 30 September 2024.
Japan Foods’ share price has slid 11.8% YTD to around S$0.30, down from its 52-week high of S$0.38.
The restaurant operator reported a weak financial performance for the first half of fiscal 2025 (1H FY2025) as tough conditions persisted in the F&B sector.
Revenue inched up 1.1% year on year to S$43.4 million with gross profit increasing by the same quantum to S$36.7 million.
Gross margin improved slightly by 0.1 percentage points to 84.5%.
Higher operating expenses, along with a S$680,000 impairment loss on its Dining Collective joint venture, resulted in a net loss of S$1.6 million for 1H FY2025.
Despite the loss, Japan Foods generated a positive free cash flow of S$12.8 million, 17% higher than the previous year.
The business is facing challenges in the form of stiff competition from new entrants along with increasing operational costs.
Japan Foods will rely on its large brand portfolio and strong financial position to weather these headwinds.
Jumbo Group (SGX: 42R)
Jumbo is an F&B company well-known for its Singapore-style live seafood specialities.
The group operates a diverse portfolio of brands such as Jumbo Seafood, Ng Ah Sio Bak Kut Teh, and Chui Huay Lim Teochew Cuisine, among others.
Jumbo’s share price has weakened by 3.6% YTD to S$0.27.
The restaurant operator reported a mixed set of earnings for its fiscal 2024 (FY2024) ending 30 September 2024.
Revenue rose 6.5% year on year to S$190.4 million while gross profit increased by 6.8% year on year to S$125 million.
Net profit, however, dipped by 6.5% year on year to S$13.7 million on higher depreciation and staff costs.
The chilli crab specialist continued to generate a positive free cash flow of S$32 million, though this was 11.5% lower than the prior year’s S$36.2 million.
The business declared a final dividend of S$0.005, taking the total dividend for FY2024 to S$0.01.
Jumbo plans to continue focusing on the domestic market and offer exceptional dining experiences to attract more customers.
Internationally, the group also has plans to expand into new markets and extend its geographic reach.
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Disclosure: Royston Yang owns shares of Delfi.
