Thai President Foods' Mama Noodles Hit by 12% Q3 Sales Plunge
Geopolitical tensions in Cambodia and shifting trade with US partners slash export revenue by 30%; Firm to pursue 'aggressive' China strategy
- Thai President Foods' third-quarter sales fell by 12.17% year-on-year, while net profit dropped by 18.62%.
- The primary driver for the decline was a 30% contraction in international sales, attributed to geopolitical tensions in Cambodia and shifting trade relations with a key US partner.
- Domestic sales also decreased by 2.24% due to slowing consumer purchasing power, which was worsened by Cambodian migrant workers returning home.
- In response to the downturn, the company plans to pursue an "aggressive" strategy to penetrate the Chinese market and develop new international opportunities.
Geopolitical tensions in Cambodia and shifting trade with US partners slash export revenue by 30%; Firm to pursue 'aggressive' China strategy.
Thai President Foods (TF), the maker of the popular ‘Mama’ instant noodles, has reported a sharp decline in both sales and profits for the third quarter, largely due to external headwinds in critical international markets.
The company's Q3 sales dropped by 12.17% year-on-year to 6,693.27 million baht, while net profit fell by 18.62% to 853.65 million baht. The overall nine-month performance shows a revenue decline of 6.44% and a profit decrease of 15.64%.
The most significant factor driving the downturn was the 30% contraction in international sales, according to Pun Paniangvait, Thai President Foods general manager. Exports, which once accounted for up to 28% of sales, have now fallen to 18%.
Pun identified key market challenges in four major destinations:
Cambodia: The company felt the full impact of ongoing Thai-Cambodian conflicts and border closures in Q3. Cambodia is a vital export market, historically accounting for 17-18% of the firm's export revenue.
United States: Sales were hurt after the second generation of a long-standing partner took over and changed its trade approach, compounding earlier issues related to tariffs. The US represents 12-13% of exports.
Australia: Economic pressures and reduced consumer spending have caused customers to switch to lower-cost instant noodles, particularly Chinese house-brands.
Europe: The market faced difficulties relating to trade resolutions with suppliers.
Domestically, sales also decreased by 2.24% as consumer purchasing power slowed, exacerbated by large numbers of Cambodian migrant workers returning home due to the border issues.
Despite the overall slump, domestic instant noodle sales saw a minor growth of approximately 2%, credited to the launch of new products such as the Mama boat noodle and Oriental Kitchen (OK) series.
In response to the international market challenges, Pun stated that the company is adopting a continuous adaptation strategy, with a significant focus on developing new markets.
"We were previously only generating sales in the low hundreds of millions of Baht in China. Now, we will utilise our full production capacity to aggressively penetrate the Chinese market," Pun said.
He affirmed that as a global brand, the company is committed to aggressively pursuing growth in foreign markets despite the current setbacks.
