CHOCOLATE confectioner Delfi booked an 8.5 per cent fall in its earnings before interest, taxes, depreciation and amortisation (Ebitda) to US$23.3 million in the first quarter ended Mar 31, from US$25.5 million the year before.
There was also a 5.3 per cent year-on-year decline in its first-quarter net sales to US$150.7 million, from US$159.1 million.
In a business update on Tuesday (May 28), the group attributed the lower net sales to its decision to “reduce and refocus spending on trade promotions”, and also to weakness in the regional currencies against the US dollar.
Sales in Indonesia fell 6.6 per cent to US$103.5 million in the first quarter, from US$110.7 million a year earlier. The confectionary company said the poorer performance was due to lower sales in the company’s own brands, following its strategic decision to undertake fewer, but more targeted, trade promotions.
Meanwhile, sales in its regional markets – comprising Malaysia, the Philippines and Singapore – dropped 2.5 per cent to US$47.2 million in the first quarter, from US$48.4 in the previous year.
This was also due to poorer sales performance of the company’s own brands in the Philippines, and the impact of weaker local currencies.
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The group generated healthy net cash from operations of US$35 million in the first quarter, up from US$27 million in the corresponding year-ago period. The net cash from operations went into funding capital expenditures of US$11.9 million, said the group.
Delfi said the heightened geopolitical challenges, macroeconomic uncertainties, high interest rates, supply-chain disruptions and rising commodity prices may dampen consumer confidence in its key markets in 2024.
But it remains confident that it can get around these risks by focusing on growing its core brands and further driving growth in its premium- and value-format categories, as well as implementing initiatives to mitigate higher input costs.
The group will also work more closely with its retail partners to enhance consumer engagement and drive demand.
Shares of Delfi closed flat at S$0.885 on Tuesday before the announcement.
