Monde Nissin Corporation (MONDE) Earnings Call Transcript & Summary

Good afternoon, and welcome to Monde Nissins's Fourth Quarter and Full Year 2024 Earnings Call. I am Mike Paska, Head of Investor Relations. On today's call with me are Henry Soesanto, Chief Executive Officer; Jesse Teo, Chief Financial Officer; David Flochel, Chief Executive Officer of Quorn Foods; and Nick Cooper, Chief Financial Officer of Quorn Foods. By now, everyone should have access to the earnings presentation and press release. These are all posted on the PSE Edge website earlier today. This information can also be found in the Investors section on Monde Nissin's website. And finally, before we begin, please note that the financial information being presented is unaudited, and during the course of this call, management may make 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 today's presentation. Now I'd like to turn the call over to Henry. Henry?

Thank you, Mike, and good afternoon, everyone. Our consolidated revenue increased by 0.1% year-on-year in Q4 and 3.7% for the full year on the comparable basis. Our APAC BFB business, which comprise 84% of the top line for the full year grew by 8.7% year-on-year in Q4 and 5.4% for the full year on a comparable basis. With our growth, we sustained our market leadership position for Q4 2024. Noodles experienced market share growth of 140 basis points from 67.3% in Q4 2023 to 68.7% in Q4 this year. Our share growth is led by our Kasalo Pack. So in fact, in the supermarket channel for this segment, we are now 106% of the market leader. We also continue to see more demand for our multipack, which effectively increases consumptions. Lastly, in Q3 2024, we launched chicken kalamansi and beef kalamansi instant mami -- flavors borrowed from our pancit canton variants that represent a premiumization of our instant mami portfolio. These are already driving incremental growth overall share gain for our wet pouch segment. For biscuit, our market share remained stable at 28.5% amid some supply constraints. Our M.Y. San Grahams continued to grow quickly, having grown 15% year-on-year in Q4 and 25% for the full year. We are also seeing acceleration growth for our flagship SkyFlakes brand supported by successful marketing campaigns. Lastly, our Mindanao biscuit plan enabled strong growth for Nissin Butter Coconut in Q4. We hope to continue this momentum as we build more capacity for our biscuit business. Next slide, please. For oyster sauce, our market share improved from 59.3% in Q4 2023 to 59.7% as category household penetration increased to 60%, 45% of which is driven by Mama Sita's brand. For yogurt drink, we further improved market share by 100 basis points and hit a new record to 92.2% from 91.2% in Q4 2023, thanks to our new mango variant and top super fruit and strawberry variants. The business also saw increased general trade distribution and purchase, we can see for the full year. Lastly, our cultured milk, Delight, remained a strong challenger with 23.6% market share, driving category growth in 2024. We believe our strong brand will continue to be relevant to our loyal consumers through efforts to build presence for our brands and strengthen our portfolio offering. Now moving on to Meat Alternative, which comprises 16% of our top line for the full year. Our top line continues to be challenging as it declined by 9.3% year-on-year for the full year on the comparable constant currency basis. On today's call, we have our new CEO for the Meat Alternative business, David Flochel. David is an experienced executive with a proven track record in both corporate and private equity settings where he has successfully led the transformation of several food and beverage businesses. He has worked in Europe and North America in the food and beverage, FMCG, food services, B2B industry for over 25 years from marketing and consumer -- customer development to general management and CEO roles. He has led several company transformations, Selecta with KKR and for Heineken U.K. post-COVID. He has also successfully led several mergers, acquisitions and carve-outs with those companies with Mars Strings as well as more recently with Halleon. Later on, he will speak on -- he will speak more about his priorities for the business. Now I would like to turn over to Jesse to provide more details on the financial performance of our consolidated APAC BFB businesses.

Thank you, Henry. I'd like to start the financial performance presentation by elaborating on the top line performance that Henry articulated earlier and provide more perspective on the results. We ended 2024 with a bang with our Q4 not only being our strongest growth quarter for the year, but also a record -- all-time record quarter for the group. This brings also our yearly -- annual revenue of PHP 83.1 billion, that represents also an all-time record for the group. As Henry explained, APAC had good quality growth, share-based growth and broad-based growth. This is, however, partially offset by the top line challenges in Meat Alternative, which declined double digits. On gross profit and gross margin, gross margin had a good trend for both in Q4. Both APAC Branded Food & Beverage and Meat Alternative have accelerated or expanded gross margin for the quarter versus year ago. This reflects lower input costs for both segments. For core EBITDA, we grew almost 9% to PHP 3.8 billion in Q4. The lower growth in EBITDA is due to the catch-up bookings of OpEx items that is typical for year-end. However, on a core net income, growth is faster at 21.2% as we experienced FX gains. Recall that one of our strategy due to our U.S. dollar short position is to stockpile on U.S. dollar, keep our idle cash in U.S. dollar. That worked really well for us for the quarter. Thus, with the quarter's performance on core net income, this brings our core net income of ownership to PHP 9.8 billion. This is an all-time record, up 28.6% versus year ago. Now during our press release in February, we also gave a heads up on noncore that we will be booking in Q4. The 2 key noncore charges are a PHP 6.9 billion impairment of our Meat Alternative investment, and a reduction in the family guarantee of PHP 2.6 billion. The details of this is in Slide 26 in the appendix. But let me share with you 3 key numbers that I'm sure most of you will be interested in. With this impairment, the remaining value of our investment of the group in the Meat Alternative segment is GBP 115 million. And with the adjustment in the family guarantee, the family guarantee is now valued at GBP 112 million. This compares with a cumulative impairment between '23 and '24 of GBP 267 million. The GBP 112 million guarantee value is a 10-year guarantee. And thus, from an accounting standpoint, we need to make an adjustment but if you simply look at the assumed stock price of the PHP 2.156 billion, which underwrites that guarantee, that will effectively be just PHP 3.77 per share, which is a 46% discount versus the closing price today. Because of the noncore charges, obviously, the reported net income for Q4 is negative PHP 5.6 billion, However, for the year, we will do a reversal and book a reported net income of PHP 450 million. This is a solid improvement versus the negative PHP 626 million loss that we booked in 2023. This brings our fiscal year core EPS to PHP 0.54 per share and reported EPS to be at PHP 0.02 per share. Our core income translated to cash. And with the next slide, next slide, please, we will show that our profit and core operating results translated to cash. We had operating -- strong, very strong operating cash of PHP 12.8 billion, slightly down versus last year because of high Q4 sales. Trade receivables was a little bit up as our Q4 had record sales. Moreover, because of the family guarantee and because of the robust core profitability, we were able to retain our strong retained earnings at the ListCo level. We booked -- we have, as of December 31, PHP 5 billion of retained earnings, which when translated to retained earnings available for dividends would be at PHP 4.2 billion. Out of this PHP 4.2 billion, next slide, please, we will be -- we have declared a dividend yesterday of PHP 0.15 per share. This is equivalent to PHP 2.7 billion and it will be applicable for all shareholders of record as of April 25, 2025, and will be payable on May 22, 2025. Next slide, please. For our CapEx plan this year, our CapEx plan continues to be -- to support the APAC Branded Food & Beverage growth. Later on, we will show that our growth for our biscuit business is especially strong. And as alluded by Henry earlier, we had supply constraints that prevented us from shipping even more. We will try to address this quickly by building a new plant in Northern Luzon for our biscuit business. Bulk of the PHP 6.6 billion that we will be spending for CapEx in APAC will be -- will go towards that. We will have a modest increase in CapEx spending in Meat Alternative to fund the restructuring that we need in order to get the savings that we have committed. Next slide, please. Now I want to zero in on APAC. I mentioned earlier that APAC had good quality, broad-based share-based growth. Let me elaborate more. PHP 18.5 billion is a record quarter for APAC. Just for perspective, it was only last Q3 2024 that we reached PHP 17 billion in APAC Branded Food & Beverage sales. We have now topped that and reset the record to PHP 18.5 billion in just one quarter. This brings us to a record PHP 69.5 billion sales for the year. Gross profit expanded as we continued to experience benign commodity costs, primarily wheat and palm oil. And EBITDA also grew strongly in Q4 and for the year with Q4 being depressed a bit as there are catch-up OpEx items. Core net income for the quarter, as explained, had a huge help from the FX stockpile that we have in order to derisk our U.S. dollar short position. Next slide, please. As I mentioned, our quality of growth is very good. It is share-based, and it is volume-based, and it is firing on all cylinders. As you can see, all business segments grew in terms of volume, strong single-digit growth for noodles and biscuits and double-digit growth for our beverage and culinary businesses. The net price decline in others is due to our pollard. Pollard is one of our byproducts when we are milling our wheat. Pollard prices, of course, will go down and it went down 27% last year as wheat prices go down. For the full year, we have broad-based volume growth, albeit at a smaller -- at a shorter clip, and we overall increased the net price as well. Next slide, please. On bottom line, zeroing in on the 2 commodities that affect our COGS the most, we are happy to report that we have good positions in wheat, where we have lower than year ago positions up to Q4. We have only a few metric tons remaining of uncovered positions for the year. And so far, the prices have been very benign below a year ago. Of course, the issue here is that our bookings are in U.S. dollars, right? But -- and depending on the exchange rate, the peso amount could change. But this is, however, offset by our stockpile, which now is over $100 million so that we could enjoy FX gains even with the peso depreciation raising the peso value of our wheat imports. For palm oil, we have talked about the rise in palm oil prices. And you can see there's a steady rise in palm oil. This affects all edible oils. However, we have been able to use the backwardated curve to be able to lock in most of our requirements for the entire year at a lower price. As you could see from the chart on palm oil, the prices that we have locked in are lower every quarter as the year goes on. This will help us in our position. Overall, depending on the exchange rate, our wheat position, because it's 16% of our COGS, would largely cover the upcharge that we see in palm oil. Now I'll turn it over to David, who will talk about the Meat Alternative business.

Thank you, Jesse. Good afternoon, everyone. I'm delighted to be able to share my priorities for the business with you today. With my track record, as presented by Henry, have been building several principles, which are believing to successfully transform the company. The first one, decisions should be made on consumer insight. Second, engaging from the top with customers in value creation. Third, making sure that the company vision, goals, priorities are well understood by the entire organization to drive alignment, execution and engagement. Focusing on execution will also be very important, tracking progress. Finally, communicating honestly, about the situation, what needs to get done and celebrate progress over time. I'm delighted to be leading the transformation of Quorn with those key principles at the heart of the turnaround program, which have been launching in January called Transform to Win Together. This multiyear program is made of 3 key pillars and building blocks. The first one, funding the journey. Saving costs, making operational gains in the supply network while operating with a lean organization. The second one is about winning again in the market as category leader by focusing on the execution of our plans with key customers based on consumer insights. Finally, driving the right culture for the company, applying high-performing team principles, leading from the front, bringing clarity, execution and accountability throughout the organization. The operational priorities of the program are; firstly, to drive operational gains through restructuring, leaner organization and a supply network optimization to drive stronger commercial execution to build and rebuild the strength of our brands to identify and prioritize fewer, clearer market opportunities to maintain a very strong cash discipline and this to minimize any risk of further write-downs in the value of the company and to rebuild you over the next 5 years. The Transform To Win program together will deliver, first of all, a slowdown in the rates of our sales decline and mid-single-digit millions of pound for EBITDA by 2025, and it will support our ambition to return to sale growth by the end of 2026 and to deliver double-digit millions of pounds core EBITDA by 2027. This multi-year program is a real north star. We are so far on track on the glad path of our ambition but more work has to be done to reach our midterm and long-term ambition. The only progress give us confidence that our plans are working and are durable. We will provide you with regular progress in our upcoming quarterly course. Now thank you very much for this first interaction, and I will hand over to Nick to talk about the 2024 results, Nick, over to you.

Thank you, David. So turning to the Meat Alternative performance. The Meat Alternative segment continued to experience pressure on the top line in the fourth quarter. But in spite of this, we've been able to deliver full year performance that's EBITDA neutral and cash positive with year-on-year gross margin expansion sustained through Q2 to Q4. The impairment that Jesse spoke about largely reflects the ongoing market and time challenges that the business is facing, and I'll come on to provide some more details of the impairment in a moment. So starting with sales in the quarter. Once again, we need to note that growth is complicated by the accounting and calendar changes that we've spoken about in previous quarters. On a reported basis, Q4 sales declined minus 1.1%, but they were down minus 10.8% on a comparable basis that adjusts for those accounting changes. Tailwinds from currency movements were then offset by the adjustment for calendar changes, leaving a like-for-like constant currency decline that was around minus 12% in the quarter. This underperformance reflects ongoing shrinkage of the key markets we operate in, most notably the U.K. retail category was down over 7% in the quarter but we also saw ongoing competitive pressure on our Quorn brand and a disappointing performance in our Foodservice business, which declined in the quarter. Core gross margin for the quarter of 21.6% was over 200 basis points up on Q4 2023, largely driven by input cost deflation. This follows year-on-year gross margin expansion in the prior 2 prior quarters and delivers approximately 160 basis points of year-on-year expansion for Q2 to Q4. Strong cost control, including the first savings from the restructuring program we announced last quarter that allowed the business to deliver PHP 149 million positive EBITDA in the quarter and neutral EBITDA for the full year. This disciplined approach to costs, extended to our stewardship of cash, which saw us close the year cash positive, and I'll talk more about this on the next slide. So I'll start with our cash accretive performance, which is underpinned by the 2 charts on the right. First, throughout 2024, we continue to take a disciplined approach to capital investment with total spend of PHP 703 million coming in below our guidance and significantly below prior years. We do expect this level to rise somewhat in 2025, and we're guiding around PHP 1 billion for the year but we will continue to scrutinize investment in this area very carefully. Secondly, we continue to drive reductions in inventory levels and we have released a very significant amount of cash as a result over the last 18 months with inventory days dropping from around 160 in 2023 to around 100 at the end of 2024. Through our supply chain transformation program, we're targeting further improvements in 2025 and 2026. And although these are likely to be smaller than past gains, they will form an important part of our cash journey going forward. Then turning to cost discipline. You can see from the chart on the left that we're delivering restructuring cost savings, in line with, if not a little ahead of the numbers we shared with you at Q3 and we're looking for opportunities to deliver further savings and efficiencies over and above these figures as part of our efforts to reach the profit ambition outlined a few moments ago. We'll keep you updated on this. Finally, I'd like to turn to the further impairment we've announced in Q4 while we can point to important progress on cost and cash during 2024, we cannot get away for the fact that the market outturn and our top line performance has been significantly below our expectations and plans for the year and this has been the main driver of the impairment we've booked in Q4. As you can see from the chart, the discounted cash flow value of the business has reduced a little more than GBP 100 million to leave us with the 2024 year-end carrying value of GBP 138 million. The drivers of the reduction are further increase in discount rates, which reduces the value by approximately GBP 20 million and a lower 5-year compound annual growth rate assumption offer significantly lower top line starting value. The revised 5-year compound growth rate of a little less than 2% reflects declines in the near term in the model and growth towards the end of the 5-year period. This reduction in carrying value appears in the accounts as an GBP 86 million impairment. With that, I'll hand back to Henry for the full year 2025 guidance.

Thank you. On top line for APAC BFB, we expect mid-single-digit growth for the full year. For Meat Alternative, as David mentioned, we aim to slow down our sales decline to the team's transformation efforts. On profitability, for APAC BFP, margin will be broadly in line versus last year with trends varying quarter-to-quarter based on our cost savings plans, commodity lock in and base comparisons. For Meat Alternative, we expect to achieve mid-single-digit core EBITDA in GDP million for the year. With that, we are now ready for Q&A.

Thanks, Henry. This concludes our formal comment. I'll now moderate Q&A portion of call.

[Operator Instructions] Jesse, the first question is for you, and this is whether you can elaborate more on the margin guidance for APAC.

Yes. As you can see from the key commodity trends that we shared earlier, our palm oil starts off higher. And then because of the backdated curves that they have locked in. And as we said, we have substantially locked in for almost a full year. We should have lower and lower pump prices throughout the year. Moreover, it has same trend and depending on the FX, which is very favorable these days. The total COGS effect of what could be very different from quarter-to-quarter. So in addition, the base of the different partners are very different. We have a very high Q1 GM and a much lower GM in Q4. So the comparisons could be different. But overall, we expect to be in line on a full year with the final full year GM of 2024 for 2025.

Thank you, Jesse. Another question for you. And this is if you can comment on whether top line growth in 2025 will be largely driven by price or volume.

It may be largely from volume.

Great. Nick, I have a question for you, and this is if you can comment on whether you are on track so far to meeting your EBITDA target in your impairment calculation?

Thanks, Mike. Yes. So it's obviously early on in the year but we've seen a solid start to the year. So I'm pleased with how the first couple of months have progressed. So, so far, I would say, yes, we are on track to meet our guidance and the first year EBITDA in the impact model.

Okay. Great. David, the next question is for you. And this is what are your plans for the U.S. business for Quorn?

I think so far, the main focus has been spending time on understanding the main drivers of growth better execution, opportunities within the core business, U.K. retail. Second opportunity came also in terms of focus around our foodservice business and the next step is going to be to come back with clarity about our ambition for the U.S. business in the coming month. So as we speak, the strategy for the U.S. is to minimize top line decline and also optimize step-by-step profitability, which we know has been challenging so far. We will come back with more clarity in the coming quarters with the plan really for the U.S. market.

Thank you. Jesse, the next question is for you, and this is with the high cash balance and only PHP 2.7 billion dividend, how do you plan to deploy the cash?

Thank you, Mike. Yes. For the cash, we have meaningful CapEx that we will be spending, as you said, PHP 7.5 billion of CapEx, largely PHP 6.6 million of which would be in APAC. We will be funding the construction of the new plan. Moreover, because of the robust cash balance that we have in order to help us with the overall profitability of Meat Alternative business, we are thinking of perhaps infusing cash in order to bring down the borrowing in -- at the Meat Alternative level to reduce the loss there and to help also the valuation of the Meat Alternative business that way. More on that plan -- on those plans in the next earnings call.

Thank you, Jesse. Jesse, another question for you is can you comment on the capacity of the new plant?

Yes. Overall, once the new plant is fully built, I think it will deliver more than north of PHP 10 billion of sales. However, we will be phasing it. The priority, obviously, would be the strong business that we have currently, Grahams, as Henry mentioned, is on a roll, and we need more capacity for that business. So as SkyFlakes as we have now been in a share increased glide path, we need both capacity for Graham and SkyFlakes immediately, both for domestic and for international business. So we will priority that. It's subset of the more than PHP 10 billion. But overall, the plant, the area footprint of the plant should be able to produce more than PHP 10 billion in incremental sales.

Thank you. Jesse, another question. Can you give more color on what is driving market share gains in noodles?

It is because of our Kasalo Pack, as Henry mentioned, Kasalo Pack has been delivering for us and grabbing share from competition. In fact, competition, as you know, has been doing promotions and lower their prices. But actually, in Q4, we increased not only value share but also volume share, which shows the resilience of our brand even amidst price promotions.

Thank you, Jesse. Another question is if you can specifically comment on what led to the 3.7% decline in the others category for pricing during the fourth quarter?

Yes. So largely, the decline is due to Pollard. So Pollard is a by-product when we mill the wheat -- we mill our own wheat and when you mill the wheat, there is a byproduct called pollard. The pollard is sold as animal feed. Because wheat prices have gone down, the pollard prices have gone down correspondingly. The prices for pollard went down 27%, and that's part of others. So that was -- that's the one depressing the price mix for others.

Jesse, just a general question for you on the Philippines. What is the pricing environment like in the Philippines? Are there plans for price hikes in 2025?

We don't comment on specific price comments. But as you can see, we are managing our input costs as much as we can doing the lock in -- locking in our U.S. dollar exposure in order to prevent us from adding additional burden. However, there are some -- maybe some businesses, some smaller parts of the business that are affected by very high inflation. For instance, coco this forms a smaller part of our business where we really have no choice about the price. But overall, I think we will strive to keep our prices as much as we can manage our costs internally to be able to deliver margins that are in line with last year. And only when the import cost has a dramatic increase will we resort to further pricing in order to recover the margin loss from the high commodity costs or specific high commodity costs. It will be more surgical this year than broad-based.

Thank you, Jesse. Another question for you. And this is if you can explain the year-over-year market share decline in biscuits in the fourth quarter?

Well, there are more active players in the recent quarter. The [indiscernible] actually has lost a bit of share. The category has become a little bit more fragmented in Q4. So for us, while we have share gains -- strong share gains for Graham and SkyFlakes are other biscuits did not grow as much. But as you saw, our volume growth was pretty robust at 9% for Q4. So it is not a matter of losing volume, but not increasing as much as our other competition. Part of the reason is our supply constraint, especially for M.Y. San Graham and SkyFlakes. This is the reason why we have to build a new plant. We don't want to lose by default by not being able to supply.

Thank you, Jesse. This is a question for Nick. And Nick, this is how much did foodservice contribute to sales in 2024?

So for the full year 2024, it was just below 19% of our total business, about 19.5% in the fourth quarter.

Thank you, Nick. Jesse, a question for you. Are you seeing sustained sales growth momentum so far this year?

It varies on different categories. We will keep our advice to a general full year mid-single digits growth for now and we will elaborate the quarter-to-quarter in the upcoming earnings call.

Okay. Another question for you, Jesse, is, did we have any sales cuts for noodles in 2024? Did we cut any prices on noodles in 2024?

No. No.

Okay. Great. Okay. Next question. This question is for Nick. The question is, will the impairment losses continue this year? If so, is there any guidance on the expected amount?

Thanks, Mike. So the valuation I shared reflects our very best view of those future drivers and the future outlook for the business. But as David mentioned, as a management team, we're very focused on the journey to minimizing the risk of further write-downs and rebuilding the value of the business over the next 5 years.

Thank you, Nick. Jesse, a question for you. Are we seeing any changes in the Philippine consumer sentiment, given improvements from easing inflation and lower rice prices?

Well, one of the big observations we have is our premium biscuit brand SkyFlakes is doing much better. So this bodes well because that means that there's a bit more money to buy an affordable premium brand like SkyFlakes. So that bodes well. But it has mixed effects on various categories. In some categories, they will trade up, some they will trade down. And there's not one clear direction.

Thank you, Jesse. Jesse, a question for you on our international sales. How much international sales did we have last year?

The International sales is still a small portion, I think it's less than 5% of our APAC branded food and beverage business. It had okay year last year but not stellar. Although we have made changes that should help us accelerate the export businesses in the coming year.

A follow-up question to that is are we profitable there?

We are. We are very much profitable. Usually, we sell the -- our export products at premium to local.

Another question for you, just on APAC, was down trading help us in the fourth quarter?

There are various ways to look at the trading for people who are in more expensive food item to our food item. And within the category, if they're buying cheaper versions of -- within the category. So far, we have seen a mixed bag of trends. As I said, in biscuits, we are buying them more affordable premium brand of SkyFlakes. But in noodles, probably there's good growth because people are buying noodles because it's more -- noodles because more economical food item versus the alternatives. So it's a mixed bag of trends. There probably is some categories in. But within the category, there's also some shifting. So there's not one conclusive thing that we can see.

Thank you, Jesse. Next question is for Nick. And Nick, can you elaborate on foodservice during the fourth quarter? What led to the decline in foodservice?

Sure, Mike. So foodservice was down about 4% in the fourth quarter. There's probably 3 things I would call out there. The first is that we're lapping a very strong quarter in Q4 of 2023. Secondly, in some of our customer groups who are more value-focused we are seeing some cost pressure coming into the category. And I think the third piece is that our wins on new menu wins fourth quarter, we're a little bit below our expectations, and we are taking steps to sharpen up our operational execution there from Q1 onwards.

Great. Thank you, Nick. Jesse, next question is for you, and it's -- if you can provide any updates on new products like Nuvi or Goodnom?

Sorry. Sorry, I was mute. Nuvi is off to a difficult start. We are reworking plans to invigorate that brand. Goodnom while the feedback -- consumer feedback were strong. We had supply issues, supply production issues to start with. But the good news is we now are -- and so we were only trading in Luzon prior to this time. But now we have solved the production issues, and now we'll be ready to supply Goodnom wide. So we expect that Goodnom will have a stronger trajectory here on.

Thank you, Jesse. Henry, I got a question for you. This is a general question. Any challenges faced so far in the first few months of 2025? And how have you managed these?

I think we have to remember that we have a very strong trend. The outside business environment is not so conducive but I think we will manage to grow. Let's say, it's too early to tell about the whole year but we are guiding at mid-single digit for the whole year.

Thank you, Henry. Jesse, a question for you, and this is excluding the impact of the U.S. dollar stockpile, could you remind us how much of our raw material costs are dominated in the U.S. dollar?

I think more specific, I think more to the point of the question, we have about USD 200 million net short position as a group. So this includes our input costs and our export sales. So net for the group, we have USD 200 million thereabouts net position. So having $100 million -- over $100 million stockpile protects us for half of our exposure.

Okay. Thank you. Jesse, a question for you. Do you expect the upcoming midterm election in the Philippines to be a short-term tailwind for APAC?

Historically, because of the -- because our products are stable. There has not been -- for our categories or noodles has been a pronounced blip in demand during election season. And so far, we have not felt it as well. See, I don't know what will happen near the elections. But so far, we don't feel it yet in our business.

Okay. Thank you. This concludes the Q&A portion of the call. I will now hand the call back over to Henry.

Thank you, Mike. Thank you, everyone, for your participation in this call and continued interest in our company. In summary, during the fourth quarter, we continued to have strong core profitability, largely due to lower commodity costs. We expect margin to be broadly in line versus last year with margin trend varying quarter-to-quarter based on our cost-saving plans, commodity lock-ins and base comparisons. While the improvement in Meat Alternative business is encouraging, our focus remain very much on cost control. The core team is striving to slow down the decline and hopefully, back to growth by 2026 and delivered a positive core EBITDA in 2025, and we'll work on this business transformation plans alongside with this new CEO, took place the business in a stronger position. With that, I look forward to speaking to you in May when we hold our first quarter earning calls, and until then, stay safe and healthy. Thank you.