Monde Nissin Corporation (MONDE) Earnings Call Transcript & Summary

Good afternoon. Welcome to Monde Nissin's First Quarter 2024 Earnings Call. I'm Paska, Investor Relations. On today's call with me are Henry Soesanto, Chief Executive Officer; Jesse Teo, Chief Financial Officer; Marco Bertacca, Chief Executive Officer of Quorn Foods; and Nick Cooper, Chief Financial Officer for Quorn foods. By now, everyone should have access to the earnings, press release and presentation. These are all available on the PSE Edge website posted earlier today. This information can also be found in the Investors section on Monde Nissin's website. Before we begin, please note that the financial information being presented is unaudited and during the course of this call, management may make forward forward-looking statements based upon current assumptions and expectations. These are not guarantees of future performance, and I encourage everyone to read the disclaimer in the presentation. Now I'd like to turn the call over to Henry for introductory remarks. Henry.

Thank you, Mike, and good afternoon everyone. I'm happy to report that first quarter saw a significant expansion in gross margin and overall profitability driven by our Asia-Pacific branded food business. This was due to continued easing of commodity costs and carryover pricing benefits resulting in all-time high for net income for our APAC BFB. While our top line growth moderated somehow partially due to fewer selling days because of the Holy Week holiday. Our other categories, which include beverage, culinary products continue to show strong growth. Business conditions for our Meat Alternative business continued to be challenging. And our focus remains on controlling costs with achieving EBITDA [ breakeven ] or better this year. I would now like to turn the call over to Jesse to provide more details for our consolidated performance of APAC's BFB. Jesse, please.

Can you turn to the previous slide, please. Previous slide, please. Okay. Good afternoon, everyone. I'm very pleased to announce our Q1 results for 2024. As Henry mentioned, it is highlighted by our significant increase in our net income of 53.4% on a consolidated basis, driven by gross margin expansion in APAC branded food and beverage. We had modest top line growth of 2.2% in APAC. We'll talk about the effect of the Holy Week holidays later on and this was [ awarded ] an increase in sales on peso basis. But transparently, there is -- there will be some adjustments on an organic basis that will be discussed later, but the highlight is gross profit increasing by over 550 basis points. As what we have been in where prices have stopped and commodity costs have turned from headwinds to tailwinds is all happening this quarter. Core EBITDA is better -- has better growth of 31.3% than faster growth than gross profit because of SG&A control for APAC branded food and beverage, it's more efficiency on percent of sales. And for meat alternative is a deliberate control of SG&A, helped by the restructuring costs that we funded last year. Our core net income expanded even faster to 53.4% versus 1.3% of quarter EBITDA due to gains in ForEx. A lot of you know that the peso has depreciated. As of March 31, 2024, the ForEx stood at 6.2%. So we were a bit because of our U.S. dollar stockpile deliberate strategy to create a national hedge of creating this dollar [ stockpile ], we were able to book a favorable exchange rate gain for that and have lower interest expense as we paid off a substantial part of our GBP-denominated debt. It was also a good time to pay that debt because the GBP-peso has appreciated since then. Core net income at ownership is almost the same as core net income. Now there is PHP 606 million of noncore items, the biggest of which over PHP 300 million is a fair value gain on the guarantee assets. Let me just explain a bit. Recall that there's the family guarantee, and we booked a guaranteed gain. In Q4, we booked a GBP 167 million of impairment in our Monde Nissin Singapore entity, and this was offset by GBP 148 million of guaranteed assets because of the stock price increasing from 8.38% at the end of December to 10.9%, we are able to book a higher fair value guarantee, but we treat it as a noncore and that's almost -- is over 300 million. We also have some ForEx gains and strong income because of the continuous high interest rates. Overall, our reported net margin is 17.2%, which is at a quite high level on a consol basis. Zeroing in on APAC, next slide, please. APAC has an even stronger accretion in gross margin with 741 basis points improvement year-on-year and 450 basis point improvement sequentially. Top line is modest due to the Holy Week holidays, and we'll explain in the next slide how it breaks down. Core EBITDA is growing faster than core gross profit and core net income, as explained, the ForEx difference grows faster than core EBITDA. Let's turn on to the analysis of the revenue. Next slide, please. So on a comparable basis, every category grew, but the highlight -- the star of the quarter was the others, which is highlighted by culinary and beverage. There are still remaining carryover pricing of 2.9% for total APAC as we took our pricing late in first quarter last year. Going forward, there will be less and less pricing effect. So we will be -- as we have lived that we will be relying for most of the year on volume growth to deliver the top line. On a comparable like-for-like days, every single category grew 3.1% for APAC and a modest growth of 0.7% for noodles and 0.6% for biscuits, but a very strong growth 13.2% for others. We'll talk about the others more in the next slides. But the effect of the lower selling days is about 3.8%. This does not include revenue recognition adjustments that we have to make because our [ incoterm ] is upon customer receipt, obviously, with the holidays -- with the Holy Week holidays at the end of March, there were a lot of [ shipments ] that were not received by customers, and they were -- had to be adjusted on our Q1 revenue. All of these will then fall to Q2. Now I further illustration of the effect of that. We are happy to note that in April, we have a 13% increase in our sales because of the Holy Week shift, and most of that should be volume as we have already anniversaried our price increases. Next slide, please. For shares, we continue to gain share in noodles. We inched up further to 67.3%. This is highlighted by Kasalo pack. This is the bigger sizing pricing pack where previously we were not competing. We are happy to report that now we are nationwide, we are well over 60% of the key competitor in this sizing and pricing segment. And in some regions, particularly in the size, I mean, that now reside as to be over 80% of the key competitor. So we are making very good inroads in the sizing and pricing segment opening our share in the process. For biscuits, one of our competitors had a low base last year. And from that low base because they are very formidable, they were able to improve their performance recover from that had tremendous growth this quarter versus the same period a year ago that because of the stronger vote, we had a slight share loss. We continued to be #2 and continue need to work on rejuvenating some of our brands. For others, we'd like to talk about culinary and our beverage business. For culinary, it's 6% of our top line and is growing at 15%. We are now growing -- last year, we had issues on quality, where we had to recall our products because of viscosity issue. That's now, I think, in the past, and we're now growing share. Beverage is the beneficiary of the extremely hot weather that we are experiencing in Q1. And that's why we see tremendous growth in our beverage business. We had 20% growth in beverage, which is 11% of our Philippine business. And this probably have been higher had we had more stocks. Obviously, the hot weather, while it benefits beverage has some effects on our noodle business a hot bowl of delicious Instant Mami and hot weather does not go hand-in-hand. Next slide, please. For commodity costs, while we have a lot of the gains, we continue to see good progress. Our risk management strategy and [indiscernible] has paid a lot of evidence for us. It may not be better than the chart, but the numbers will show that for wheat, which is 18% of our APAC branded food and beverage, COGS, and palm oil, which is 6% of our APAC branded food and beverage COGS, we will have year-on-year double-digit declines Q2 and Q3. We will hold our comments on Q4 because the lock-ins are still below 50%. All these, plus our strategy of putting our excess cash into U.S. dollars has helped us manage through all the volatility in commodities and FX. On palm oil specifically, during our Q4 earnings call is about [indiscernible] at 1-year highs. That has fallen sales, and we have started the opportunity to build our [indiscernible] in Q3 and Q4. This will be beneficial for us from these quarters. Next slide. I turn it now over to Marc, who will give you his comments on Meat Alternative.

Thank you very much, Jesse. Good morning, good afternoon to everyone. It is fair to say that there is not a huge number of new news compared to the recent information given to all of you. And in fact, the market has not turned yet. We still have some pressure driven by the fact that, yes, while inflation is coming down, the market for meat alternative is not rebounded yet. Having said that, we continue to focus our efforts on both cost and cash, and you would see some impact on that. And Nick will give you a bit more detail in the slides later. But one thing that I want to mention is, the very positive news is that we continue to hold our market share, in particularly in our biggest market, which is the U.K. This is relating the fact that they are in a market that is challenged, consumer go back to what they know best. Another important example of that, that you would see also in the [Audio Gap] gain, our relevance and the sense of our brand is very important. So the consumers are staying with the product that they know. So market share in the right direction. Foodservice continued to grow. Extremely important for us is becoming a bigger, bigger share of our total business. And in general, we see and we anticipate that through the remainder of the year. And as Henry has given you already set a guidance of the fact that we are planning to be at least breakeven, if not better, in terms of EBITDA terms on a full year base. Over to you Nick for a bit more details on our quarterly results.

Brilliant. Thank you, Marco. So if you could move to the slide, please. Great. So as Marco said, for the first quarter, the category environment for Meat Alternative have remained challenging, but we have seen benefits from our continued focus on cost and cash. At an underlying level, sales declined by about 9% in the quarter, and we posted a small core EBITDA of PHP 60 million or 1.8% of sales. This represents a PHP 36 million improvement on the negative EBITDA of PHP 116 million in Q1 2023. And as Marco has said, in the full year, we expect EBITDA, in the worse, to breakeven. We do anticipate some variability, some lumpiness as we progress through the quarters. Looking at the details on this slide. First, you'll recall that from the Q4 results presentation, we changed our [indiscernible] of some payments to customers in Q4 2023. We presented comparable figures which adjust historical comparators for same [ change in treatment ]. I will focus here on these comparable results, which you can see in the right-hand column. On this comparable base sales grew 0.6%, driven by a 4% decline in sales at constant exchange rates, offset by an appreciation of the pound against the peso. This result includes 2 distorting factors, which we adjust for to illustrate our underlying trajectory in the quarter. First, we're lapping a period of customer inventory increases in Q1 2023 with a period where customers have reduced inventories in 2024. And second, our Q1 accounting period is approximately 7% longer in 2024 than it was in 2023. When you adjust for these 2 effects, we see an underlying rate of constant currency sales decline of approximately 9% in the quarter. Moving on to gross profit. Our core gross margin of 20% was 376 basis points down year-on-year with declines driven by lower production volumes stemming in part from the steps we are taking to reduce inventory, partially offset by benefits that we're now starting to see from input cost deflation. You will have noticed that year-on-year gross margin erosion is slowing and absolute gross margins have stabilized. And as we guided with the Q4 results, we expect to see year-on-year gross margin expansion of 200 basis points or more on average for the remainder of the year. But as with EBITDA, we expect some lumpiness in this measure through the quarters. Moving on to core EBITDA. We posted a loss of PHP 60 million in Q1. But as I mentioned at the start, this was PHP 56 million better than the loss that we posted in Q1 2023 in spite of year-on-year declines in sales and gross profit. This was achieved through the impact of our restructuring in 2023 combined with cost control as well as a change in the phasing of some commercial investment between the quarters. Finally, during Q1, we continued to focus on cash and drove more than a 10% reduction in inventories held. We expect to see inventory reductions continue, albeit at a slower rate through future quarters. Next slide, please. Moving on to the U.K. retail market. We continue to see modest gains in share with the frozen sector advancing strongly, partially offset by small losses in chilled. And as Marco mentioned, the U.K. market continued to decline and was down 8.6% in Q1 compared to the same period a year earlier. Finally, our foodservice business continued to grow and posted an increase of almost 7% in sales per day. It accounted for 18% of our sales in Q1, up from 16% Q1 2023 and saw momentum continue in Europe and with our quick-serve restaurant customers. With that, I'll hand back to you, Jesse.

Thank you, Nick. Next slide, please. Next slide. So we end with our prepared remarks with a guidance. So as we shared earlier, for APAC branded food and beverage, we saw a strong rebound of [ 30% ] growth in April due to the timing of Holy Week on this recovering the lost revenue that we had during the end of March. For Meat Alternative, we need to have top line growth challenges even if we're maintaining shares, the category is still in decline. On the bottom line, on a consolidated basis, we are in continued gross margin improvement year-on-year due to the lock-in on commodities and key commodity costs and wheat. And then the FX is becoming a headwind for us, we are substantially -- we have good risk management that will prevent us from bearing the brunt of the depreciation of the peso. With that, we end our remarks and are ready for Q&A session.

Thank you, Jesse. Okay. [Operator Instructions] Jesse, the question is for you. And this is, can you provide the revenue breakdown for APAC between domestic and international?

Yes. 94% is domestic Philippines and 6% international.

Okay. Great. And Nick, along the same lines, can you provide the revenue breakdown for Meat Alternatives, U.K., U.S. and rest of the world?

Yes. So U.K. accounts for 8%, the U.S. 5%, and the rest of the world 15%.

Jesse, next question is for you and this is how much is A&P the percentage of sales in the fourth quarter?

It is 2.6% for APAC. It's pretty low versus our 4-year plan, but it's a phasing thing. We expect the A&P to build up a bit in the [ succeeding ] quarter.

Okay. Another question for you, and this is on CapEx. How much was spent in Q1?

PHP 771 million spent in Q1. Our [indiscernible] is about PHP 10 billion. So we have a ways to go to spend the budget with [indiscernible].

Okay. Nick, the next question is for you, and this is whether there was any Meat Alternative inventory write-off in the first quarter?

No, there wasn't a material write-off in the first quarter.

Okay. Jesse, this is a question for you just regarding the gross margin for APAC BFB. And this is -- the question is how sustainable is that margin for the rest of the year?

I've discussed the key components of it, wheat and palm oil. And so far, we have good positions even if those commodities are moving, we have good lock-in positions. So we have a reasonable expectation that the gains can be continued. We are quite confident on year-on-year improvements, but sequential improvements dividend on the other factors.

Jesse, another question for you, and this is volumes for noodles was flattish year-over-year. Can we expect a flattish volume growing forward? Or is there still room or volumes to trend higher?

Sorry?

Sorry, Jesse. I'll repeat. For noodle volume, is there room for the volume trend higher for the remainder of the year?

Yes. So as I mentioned earlier, our share continues to be strong. We do have a momentum. Earlier, I mentioned that the hot weather is a huge factor, especially our Instant Mami noodles, a bowl of hot delicious Instant Mami, does not go with the hot weather. So like many of you -- like many of our country men all praying for rain in in Manila and the rest of the country, I think this will help our business. Fortunately, [indiscernible] is now at its end. And hopefully, with the rains coming, the demand for noodles, especially the Instant Mami will increase. But if you adjust for the revenue recognition and the fewer selling day history, we did continue to turn in volume growth for Q1.

Okay. Next question is for Nick. And this is in regards to Meat Alternative, Quorn sales did slightly worse at minus 10.1% relative to the overall market at minus 8.6%. Can you provide any additional detail on why is this the case?

Yes. So as I referenced in my remarks, Mike, the share gains in frozen continue very only. We're working some challenges in chilled right now. We are lapping successful daily [indiscernible] and the ramp-up of our daily base at the back end of 2022 and the start of 2023, and that is a challenge for us, and we're working to drive strong performance in our Quorn brand in the chilled sector. But having said that, and you'll see that from the chart in the backup of the materials -- other brand in chilled is advancing very strongly in the quarter.

And Nick another question for you. Can you remind us how much food services contributed to sales?

So it was 18.2% to be precise in the quarter.

Jesse, a question for you. Can you share something on the synergies and partnership with euro as is the 1-year mark of the investment.

Some of the plans that we are discussing cannot yet be shared publicly, we'll share when it's appropriate.

Okay. Jesse, another question for you. Can you share on how the bread business is doing and how much it contributes to overall sales?

Bread business has smallest growth. Bottom line has improved. So the losses have gone down significantly. But as a percent of total Philippine sales are still very small, less than 1%.

Okay. Next question, I think, for you Marco. And this is -- can you address what needs to happen for Meat Alternative volumes to recover? And also a change from the consumer's perspective versus the category growth that was enjoyed over the last couple of decades.

Well, first of all, it's a very, very good question. You may remember that a few quarters ago, the Meat Alternative business was really growing as a category overall, a very strong, let's say, quarter to [indiscernible] growth that there was a lot of excitement. I really believe that fundamental reasons behind that excitement are not going to go away. And this is why we remain very committed to the mid- to long-term interest of that, elements like the reason why our kids are changing their diets for the future of themselves and the planet will not go away. We don't only strengthen. Of course, we have seen a strong headwind, even mainly by the stability of money during these challenging times, really not just in Europe, but across the world, where people had to refocus on provide themselves with good nutrition, but lift towards more basic [Audio Gap] the element of a bit more cash-strapped consumer is the element. The second one has been a thought of the meat overall category. We have seen many companies have started a strong campaign against an iterative. And that's why we have seen that in this period, there is a typical consolidation of brands that is happening around the world. So it was almost a given that we will go through this consolidation of brands. Some of the brands that have started on this market are exiting the market. They have not been able to find extra days [indiscernible] critical ones. The big brands and the heritage brands like Quorn, are the ones therefore today and therefore tomorrow. So you will see that there's an overall general market contraction. One of the big elements they are focusing on is, we are really paying attention to become more efficient and more focus on our cash on load in our inventory on being more agile so that we are also able to generate funds to pick off the invent in recruiting more people to our category. We have a big role to play, which is we are the category leader in the U.K. So by generating more cash being much more careful in the area where we spend the money in restructuring the years where we have to restructure. We will be able to set aside some funds to also invest in the market because this is also one of our objectives. So -- what has changed has been the consumer restructuring on that -- mainly the finances. Some of the brands left the market, the key brand is here, we will drive, in particular the U.K. increased penetration, recapture the flexitarian and grow the penetration of the market. And we would buy saving money and being very careful where we spend them ahead about in recruitment.

Thank you, Marco. Jesse, the next question is for you. Can you confirm what April sales growth was?

Yes, I said [indiscernible].

The next question is for you, Nick. And this is regarding service per day sales being flattish for the fourth quarter of 2022. Could you throw some color on QSR shifts and how that's changed from fourth quarter of 2022?

So I think if you look at the chart provided in the Meat Alternative, you can see some variability quarter-on-quarter, and that is driven by holiday patterns driven by customer buying patterns. But within that, I think we see good momentum to both the foodservice business in the institutions in the U.K. with some of our quick service restaurant partners, particularly with KFC in U.K. and in Europe and now growing contribution from the food service partnerships and the foodservice institutional business that we're starting to build across Europe. So I feel good about the trajectory of those different parts of the business, but there is some lumps to that profile. But we continue to see that as a strong driver for the business going forward.

The next question is for you, Henry. And this -- what are your thoughts in spinning off the Meat Alternative business from the listed entity?

I think for me, we have to look at it this way. So in the past 3 years, aside from this all extra events, then the cost went up until the day we haven't recovered the cost yet. So prior to that, the category was booming because of the influx of the flexitarian coming into this category. But with this difficulty of the inflation and energy costs and everything, all these flexitarian people just shy away, they wanted the price to be parity with the meat. They wanted to probably should be as good pace as meat and the prior days, it doesn't happen. So all these flexitarian people for the time being under this kind of situation has roughly [indiscernible] for a while. But this was an opportunity to regroup to restrain again our strategy whether or not the strategy saying like in the past, it's black and white, the product should be driven vegetarian then you attractive flexitarian or not. We are still in the process of evaluating this. So the goal is we have to deliver a product which is at [indiscernible] as meat, which is the price parity as many. Otherwise, we have to offer some benefit of this to be able to sell it at the premium. So we are still in the process, give us a bit of time to do this.

Jesse, can you talk about the [indiscernible].

I haven't answered again for the question of Figaro synergy. Sadly, we did see this kind of strategy coming very, very solidly at this point in time. So especially, we were thinking that with the brand of Figaro, for example, we can easily come into the coffee at -- 3-in-1 coffee using the brand. To be honest, it doesn't happen. It did not happen. If you force to do it, we are going to be losing. We are going to lose the market. We cannot compete with the current market leader with, which is playing a very, very competitive, very tough category. We cannot compete them. But having invested in that category, we gained a lot of knowledge in this QSR and days like this. We are in the process of evaluating what we can do -- what we can have -- Figaro in the future. So for the time being, the easy answer is that we still cannot find the synergy for the time being, but gain the knowledge already for already 1 year, we gained the knowledge. Let's wait again for a bit of time.

Jesse, the next question is for you. And this is, can you talk about the competitive intensity in the APAC BFB? And how is Monde differentiating its offering value promotions to customers? How are customers reacting to increase share in noodles -- or sorry, how are competitors reacting to increased sharing noodles.

I mean, the severely increased competitive intensity. Fortunately, there is -- no one tried to initiate price wars, which is good. That's why our pricing has stopped. But people are trying to innovate and have to innovate with them. People are trying to make initiatives to close up gaps, portfolio gaps as we are doing, and we have to do the same. So it's FMC -- it's not the -- the good is not fast, but the preferences also change very fast. So we need to be faster and be able to adapt to heavy consumer requirements as far as special versus mixed users. So that has been the reality in competing in FMCG is no different -- very different these days. How are we differentiating? I think the strength of SkyFlakes, these are something we can build on as we've shown [indiscernible] when we did not offer a rightsizing pricing entry into the large we were losing because people were looking for that. But when we put a similar size product with the Lucky Me! brand, that quickly took off, and it's now the part of that pricing segment. So we need to make sure we close those portfolio gaps in order to protect our share. For biscuits a little bit different. One of the key competitor, obviously, better price and has overtaken us as #1. We have to do our part to articulate value to differentiate to reinvigorate some brands. So we can be more competitive. And I think that's what we need to do it in order to continue to stay and gain share in this category.

Let's encourage the questions here. Those who are not going to join the press. We encourage them to ask questions here, just to give us the opportunity to explain.

The next question is for Nick, and can you talk about how Quorn is doing outside the U.K.? How is the U.S. business doing? How is the expansion we are doing?

Maybe, Mike, I can take this one. And so we have clearly during this current time to refocus our option or what following the priorities. #1, our home turf we are creatively defending our market share, and that is the UK. In U.S., you remember we have initiated this restructuring. We see the U.S. with some housing trends, but if anything even magnified. So our key focus on the U.S. is on achieving a breakeven, so minimizing losses in the U.S. We've done lot of effort and a lot of -- the team is doing really well. Of course, the top line is still up from the category trend, but we are really thinking hard to achieve a breakeven point. Europe, we are strengthening our vision on selected key markets. I just mentioned you Switzerland earlier and the Nordics as well. We left some markets we were not able to make profit yet. And we are focusing on some specific markets and static channel. In particular, we see a very strong growth of food service Europe. And this is why we are now looking at food service on a global basis, a set-up foodservice division that you heard from Nick is now becoming more than 18% of our total business. That is up from around 10%, 12% about 4 years ago. So you can say food service is becoming more relevant. This is where we play to our strength. With a very, very strong route to market and for food service, not just in the U.K., but outside of the U.K. in Europe, we're going very strongly there. And for the rest of the world, we travel through food service or through our partner in QSR. And I know, we had a number of projects, in particular with our big account KFC. And the first one, I would kindly ask to be a little bit patient because we expect to be able to give you more news in the second part of the year, in particular in the Asia area.

Next question is to you, Jesse. And the question is, do margins of APAC BFB reflect any seasonality?

So let me answer that question in 2 ways. If production is first, let me address this mix. Yes, it's a sales mix seasonality effect. Some of our products are like growing are more popular during the holiday season, November, December. Noodles is actually strong during rainy season. So in July, August [Audio Gap] where the new school calendar is, you will have a strength there. And beverage, when it's hot, obviously, people rig more and it has a tailwind to the category. But sales mix is less of a factor on margins than the key commodity costs. So the major driver for gross margin is really the commodity costs. Our main commodities being wheat, palm oil, sugar, eggs. If these behave, then it will offset any effects of sales mix on margins.

Jesse, another question for you and Henry. And this would be, if you could share any comments on the Filipino consumer behavior, we've seen low single-digit growth for [indiscernible] and I was wondering if this will be a trend in the second half is down trading behavior persisting and do you think you will benefit from that?

The advantage is persisting. I think we will be somehow benefiting from this. Yes, of course, second answer. Whether or not the down rating will proceed, we don't know. It depends, right? The inflation rate has picked up a bit, but let's --

Let me just add comments of Henry. I would have generalized all food because as I mentioned, especially in this hot weather, there are winners and losers. Our beverage business is the main beneficiary of this. It's growing very strongly, but we are -- we can't say enough and our growth is the supply because we simply could not catch up with the demand. But those obviously, because it's typically a full item, right? It has some headwind effect. So if you generalize, there are some winners and losers depending on the conditions.

Next question is for you, Jesse, well, and this is, there appears to be a significant ramp-up in CapEx for 2024 compared to the previous years. What will be the focus of this or APAC BFB?

Yes. So most of the CapEx will be spent in APAC. I think majority of the CapEx of 7, I think 6 will be spent in APAC. We have a lot of categories in businesses where we don't have enough capacity [Audio Gap], it's simply not enough to cope with the demand. And so we're building more factories as we build more [Audio Gap] during Q4, we mentioned that we are targeting 5% of sales for A&P, just over 5% of sales. So 2.6% is about half of that rate. So there will be an acceleration of spending.

And next question is also for you, Jesse. And this is what kind of volume growth for APAC BFB are we targeting for 2024?

Different for each category. I think for culinary and beverage, we're expecting strong double-digit growth. For biscuits, historically, we have had mid-single digits growth, and we expect to be able to sustain that.

Okay. Thank you, Jesse. This concludes the question-and-answer portion of the call. I would like to now turn it back over to Henry for closing remarks.

Thank you. So thank you, everyone, for participating in this call and continued interest in our company. In summary, the first quarter showed significant gross margin expansion driven by the continued easing in raw material costs and some carryover pricing benefits in Asia Pacific business -- branded business, resulting in record Asia Pacific core net income, and then this higher margin and profitability continued to be sustained in the second quarter. Due to the short-term number of selling days because of the Holy Week holiday, top line growth moderated somehow somewhat. However, our other categories led by beverage and culinary products delivered another strong quarter of growth. So our focus on Meat Alternative business continues to be on cost control and Quorn team is striving to deliver EBITDA breakeven or better results for the year. So with that, I look forward to speaking to you later this year when we hold our second quarter earnings call. So until then, stay safe and healthy.