Operations Review
This segment comprises the processing, branding and distribution of a wide range of edible food products. These food products are sold in either consumer and medium packaging or in bulk.
We are the largest producer of consumer pack edible oils in the world, with leading positions in China, Indonesia, India, Vietnam, Sri Lanka and several African countries. We also have increasing sales of rice, flour, noodles and condiments under a diverse brand portfolio. Our range of high-quality essential food products enabled us to build leading sales and distribution networks in many countries. Our consumer brands are well-established and renowned for their quality, having won numerous product awards in their respective markets.
Market Trends
The outbreak of Covid-19 and resulting lockdowns around the world saw a shift towards purchases of consumer packed food products for home consumption. The pandemic also led to consumers placing greater emphasis on food safety and quality, which benefited our consumer products business. Even as lockdown restrictions eased in many countries, demand for our consumer products remained steady. However, demand for medium pack and bulk products supplied to hotels, restaurants and catering (HORECA) businesses is still affected by the restrictions imposed in many countries and has yet to return to pre-pandemic levels.
Our Performance
In 2020, the Food Products segment achieved a pre-tax profit of US$1.15 billion, an 18% increase from US$974.5 million in 2019, mainly boosted by better margins from the oil, flour and sugar businesses.
As China recovered from the Covid-19 outbreak in the second half of the year, the Group saw a sharp recovery in volume for medium pack and bulk products, as demand from the HORECA sector began to pick up. Consumer products sales volume grew 22% from 7.7 million MT to 9.4 million MT while medium pack and bulk sales increased 7% from 16.6 million MT to 17.8 million MT.
Outlook and Strategy
We will continue to leverage our existing distribution networks, brands and research and development capabilities to create new products to widen our range of food staples. We are also developing superior quality products with higher margin to improve our profitability.
With the gradual easing of Covid-19 restrictions, we anticipate a recovery in the demand of our medium pack and bulk products as HORECA businesses continue to pick up.
