It has been a tough environment for numerous businesses in the past year.
The combination of high inflation and surging interest rates has raised both operating and financing costs for a wide swath of companies.
Businesses with strong franchises and brands, however, can command good customer loyalty while also raising their prices to combat inflation.
These are the kinds of businesses you will like to own when the times get tough as they have the mettle and resilience to get through tough times.
Here are four consumer-related stocks that beat the odds and reported higher profits for last year.
And with higher profits, the odds of a dividend increase are also more likely.
QAF Limited (SGX: Q01)
QAF is a multi-industry food company with core divisions in bakery, distribution and warehousing. It sells the iconic Gardenia and Bonjour brands of bread that are well-loved by many.
The group has an extensive operations and distribution network and employs more than 9,000 people regionally.
QAF reported a mixed set of earnings for 2022.
Revenue inched up 3% year on year to S$577.5 million but operating profit plunged 44% year on year to S$16.6 million due to higher expenses.
The group, however, received an insurance payment of S$19.5 million for a flooding episode in Malaysia that helped to boost its net profit.
Net profit ended up 16% higher year on year at S$25.7 million.
Despite the weaker operating profit, there was reason to rejoice.
The group has a strong balance sheet with S$216.8 million of cash with just S$20.8 million of debt.
QAF also generated a healthy free cash flow of S$25.9 million for 2022.
A final dividend of S$0.04 was proposed, in line with the amount paid out a year ago.
QAF also paid out a special interim dividend of S$0.02 last year, showcasing its capacity for increased dividends moving forward.
Delfi Ltd (SGX: P34)
Delfi manufactures and distributes chocolate confectionary products in over 17 countries and has an established portfolio of brands such as SilverQueen, Ceres, and Delfi.
The group posted a commendable set of earnings for 2022 with revenue rising 19.2% year on year to US$483 million.
Gross margin improved by 1.2 percentage points to 30.7%, resulting in a 23.9% year on year jump in gross profit to US$148.3 million.
Net profit surged by nearly 50% year on year to US$43.9 million.
Delfi maintained a healthy balance sheet with US$77.1 million of cash with just US$19 million in borrowings.
The group hiked its dividend by 51.9% year on year to US$0.043 in line with the better results.
If Delfi carries on with its robust performance, 2023 could see more dividend increases from the group.
Food Empire (SGX: F03)
Food Empire manufactures and sells branded instant beverages and snack foods.
The group’s products are sold in over 50 countries and it has eight manufacturing facilities located in five countries.
2022 saw an impressive performance as Food Empire reported a 24.5% year on year jump in revenue to US$398.4 million.
Net profit more than tripled year on year from US$19.3 million to US$60.1 million, aided by a US$15.3 million gain on the disposal of a subsidiary.
Excluding this amount, net profit for 2022 would still have soared by 133.7% year on year to US$45.1 million.
Free cash flow jumped more than sevenfold from US$8.1 million in 2021 to US$59 million in 2022.
A first and final dividend of S$0.044 was declared, double that of the S$0.022 paid out in 2021.
Food Empire expects its India and Vietnam divisions to post growth this year as new plants start operating.
Should profit increase once again for 2023, the group may increase its dividend payout.
Sheng Siong Group (SGX: OV8)
Sheng Siong is one of the largest supermarket chains in Singapore with 67 outlets across the island.
The group offers a wide assortment of products including live and chilled produce as well as general merchandise such as toiletries and essential household products.
Sheng Siong reported a mixed set of earnings for 2022 with revenue dipping by 2.2% year on year to S$1.3 billion.
Net profit, however, inched up 0.4% year on year to S$133.6 million as the supermarket operator improved its gross margin from 28.7% in 2021 to 29.4% in 2022.
The group maintained a clean balance sheet with S$275.5 million of cash with zero debt.
Free cash flow was also very healthy at S$158 million for 2022.
2022’s dividend of S$0.0622 was marginally higher than 2021’s total dividend of S$0.062.
The growing supply of HDB flats for 2023 should provide ample opportunities for the group to expand its store network.
If Sheng Siong can continue to grow its revenue and profits, management may reward shareholders with a higher dividend this year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
