Food Empire

Food Empire: 2Q14 net profit fell 28.1% to US$2.7m, while top line fell 7.7% to US$59.3m, as Russia, and Eastern Europe and Central Asia saw a 12% decrease in revenue to US$33.1m and US$ 17.3m respectively, amid a weakened ruble, hryvnia and tenge against the US$. This was offset by a 27% increase in other markets, thanks to improved sales in countries such as China, Philippines and Malaysia. While the broader economic sanctions against Russia announced in July is likely to weigh the ruble and hryvnia further, retaliatory sanctions by Russia will not affect Food Empire as it does not source food materials from sanctioned countries, e.g. US/ EU. Meanwhile, its non-dairy creamer plant and snack factory in Malaysia has commenced commercial production, while its beverage manufacturing facility is expected to begin delivering orders by 3Q14. Food Empire trades at 1x P/B, while its P/E is not meaningful as it incurred a net loss in 1H14.