Food Empire's earnings hit by crisis in key markets

SINGAPORE - Food Empire has been hard hit by the political crisis in Ukraine, with another key market, Russia, also suffering in its aggressive support of pro-Russian separatists in the Eastern European country.

The mainboard-listed company said its second quarter net profit fell by 28.1 per cent to US$2.7 million (S$3.4 million).

Revenue for the three months to June 30 dropped by 7.7 per cent to US$59.3 million.

The group fell to a net loss of US$339,000 in the first six months, against a profit of

US$9.3 million in the same period last year.

This was mainly due to the substantial depreciation of the currencies of its two largest markets, Russia and Ukraine.

"The ongoing political uncertainty in two of the group's key markets, Russia and Ukraine, which began in late 2013 has escalated into an international crisis by March 2014.

"This resulted in a sharp devaluation of the Ukrainian hryvnia against the US dollar due to the heightened economic uncertainty," said Food Empire in a statement.

The crisis has also weakened the Russian ruble, from 32.7 per US dollar on Dec 31 to 33.6 on June 30.

Meanwhile, the hryvnia fell from 8.24 to 11.85 against the greenback.

"As the group is economically exposed to both markets, it is negatively affected by the revaluation of its outstanding trade receivables denominated in currencies other than the US dollar," said Food Empire.

Quarterly earnings per share slipped to 0.5 US cent from 0.69 US cent previously while net asset value per share shrank to 30.37 US cents compared to 31.15 US cents as at Dec 31.