DEAR SHAREHOLDERS,
On behalf of the board of directors (the “Board”) of Nissin Foods Company Limited (the “Company”), I am delighted to present the Annual Report of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2021. This year we celebrate the fifth anniversary of the Company’s listing in Hong Kong.
FINANCIAL PERFORMANCE BEATING HIGH BASE LAST YEAR
Under the unprecedented COVID-19 pandemic, all the Group’s management, staff, and workers have been working together with their outstanding efforts to achieve management goals and sharing the belief of the Group’s founder, Mr. Momofuku Ando, that “Food-related job is a sacred profession 『( 食為聖職』)”. The Group was able to exceed a high base of 2020 financial performances. The Group’s profit attributable to owners of the Company grew by approximately 0.6% to HK$ 303.8 million, overcoming the high base of 2020, the increase in the cost of raw materials mainly due to disruption of the global supply chain, and an increase in brand investment in our signature product, Cup Noodles . The Group’s revenue grew by approximately 10.0% year-on-year as the PRC operation performed well under the expansion of sales geographical territory and increased sales channels in Northern China and Western China, with double-digit growth in sales volume for the flagship product, Cup Noodles . In addition, Hong Kong operations contributed to overall growth in revenue by the increase in sales in the non-noodles business from a diversified product portfolio, including granola, vegetable and fruit juice from Kagome, and fresh-cut vegetable.
SUCCESSFUL ENDEAVOUR FOR REVAMPED CUP NOODLES
The Group has successfully launched a revamp to our signature brand Cup Noodles . To celebrate the 50th anniversary of the birth of Cup Noodles , the Group invested in our signature brand, Cup Noodles , by upgrading the quality of noodles and soup so that our customers can enjoy the product even more. Consumers have received the revamp well, with an increase in the sales volume of Cup Noodle of approximately 10.0% when compared with that of the previous year. This investment will be a pivotal milestone for the Cup Noodles brand with an aim to penetrate in the PRC when we look back to the present in ten years’ time.
INVESTMENT IN BUSINESS AND TALENT
In terms of investment in business and operation, it was our great honour to receive a maximum funding support of HK$15.0 million from the Re-industrialisation Funding Scheme by the Innovation and Technology Commission of Hong Kong government in November 2021, to be used for the installation of a new smart production line in Hong Kong. We will implement a new automated production line that will employ robotics, sensors and smart systems for the production of instant noodle products, enabling real-time monitoring of the production process. Moreover, a new packaging manufacturing plant located at Zhuhai commenced operation to produce soft packaging material for cup and bag-type instant noodles in December 2021. All strategic investments will contribute to profit growth, enabling the Group to reinforce the brand loyalty and enhance cost competitiveness for sustainable development in the future.
In terms of investment in talents, the Group continued to invest in talented employees by equipping them with new management know- how, technical skill and knowledge. It is anticipated that the increase in skill set in management, production, R&D and sale and marketing of the talents will contribute to the Group’s sustainable growth in the future.
SUSTAINABILITY
The Group is committed to sustainability management as a responsible company and citizen, under the belief of our founder, Mr Momofuku Ando, that “Create food to serve society 『( 食創為世』)”. During the year, the Group has implemented various initiatives to demonstrate its commitment to sustainability management while coping with the environment, contributing to society and community, and attending to the well-being of our employees.
First, through the total product design concept, the Cup Noodles was revamped with improved noodles and soup quality. The Company has reduced the amount of paper and plastic used for manufacturing containers and has efficiently loaded the cardboard packaged products into trucks, which has resulted in a significant reduction in CO2 emissions equivalent to approximately 7,400 cedar trees per year.
Second, following the installation of four solar photovoltaics on the roofs of the manufacturing sites in Hong Kong in 2020, the Group has installed solar photovoltaics on the rooftops of the manufacturing sites located in Zhejiang and Fujian of the PRC to enhance the usage of renewable energy in 2021. We continue to seek new sites to install solar photovoltaics in order to save energy for the existing plants.
Third, in March 2021, the much-anticipated CUPNOODLES MUSEUM Hong Kong (the “Museum”) was launched in Hong Kong. We continue to nurture the next generation through educational and entertaining encounters with food. The Company introduced the Museum under the basic theme of “The Innovation Journey of Momofuku Ando”. The Museum comprises three interactive workshops and many distinctive exhibition corners. Visitors can personalise their own Cup Noodles, Demae Iccho , and Nissin Granola and take them home.
OUTLOOK 2022
As the consumption upgrade trend remains in progress in the PRC, there will be ample opportunities for our premium instant noodles to expand our market share. In addition, the Group is committed to delivering more value-added products to its consumers across the PRC, raising our brand awareness, and increasing our geographical sales coverages. In terms of brand development, not only does the Group continue to sell more products under Cup Noodles brand, but it also aims to increase the sales of bag-typed noodles such as Demae Iccho brand in the PRC. In terms of the non-instant noodles business, the Group will continue to expand them in Hong Kong and the PRC, create synergy with the noodle business, and thereby enhance the financial performance of this business segment.
In response to the increasing cost pressure from the unstable supply and soaring prices of raw materials, which is one of our biggest challenges, the Company has increased the ex-factory prices of our products in the PRC and Hong Kong, with effective from 1 March 2022 and 1 April 2022, respectively. While we expect to alleviate the increasing cost pressure from the unstable supply and soaring price of raw materials and logistics by price revision, we will, at the same time, execute cost-saving initiatives such as improving its production efficiency and reducing expenses in order to achieve sustainable profit growth.
MISSION, RESOLUTION OF CHAIRMAN
In 2022, I am fully committed to delivering outstanding results and ensuring a deep penetration of Cup Noodles in the PRC under the collective effort of our management team, staff and workers.
I am determined to maximise business outcome while efficiently developing the Group’s business operation and organisation aiming to create long-term value for all stakeholders, including shareholders and investors of the Company.
With such goals in mind, I believe in enriching our lives through the production and distribution of tasty, healthy and quality food, and I share the belief of our founder, Mr. Momofuku Ando, that “Create food to serve society 『( 食創為世』”).
Kiyotaka Ando
Chairman
