Meat alternatives have again plagued Monde Nissin’s results as first-quarter sales in the category dropped and profits remained in the red.

The Philippines-headquartered company, the owner of the Quorn vegan and vegetarian brand, reported revenues across the group rose, including in its core Asia Pacific branded food and beverage business (APAC BFB).

However, “category softness” continued in meat alternatives in the three months to 31 March, although the 4% sales decline was at least better than the high single-digit decrease flagged in the annual results announcement in April.

As meat-free sales fell 2.8% in the UK, predominately reflecting the Quorn performance amid a “challenging retail market”, Henry Soesanto said: “For our meat-alternative business, we remain vigilant, minimising costs and looking for efficiencies with the goal of remaining EBITDA flat or better for the year.”

Despite the softness, foodservice sales in meat alternatives continue to outperform retail, as revenue through the channel increased 14.5% in the quarter on a comparable basis. Out-of-home sales were up 6% last year.

Nick Cooper, the CFO of the Quorn division, commented on the foodservice outperformance in April, noting the sales gains were “driven by strong performance in the UK and Europe, including growth in KFC, partially offset by lower sales in the US and then some other QSR customers”.

Total first-quarter revenue for meat alternatives stood at 3.4bn pesos ($59.1m), while Monde Nissin’s group sales rose 2.1% to 20.3bn pesos.

Other metrics for meat-free were bleak, with gross profit down 14.5% at 685m pesos and the margin down 376 basis points at 20%.

Monde Nissin said the decrease in profits was “due to production volume decline as we bring down inventory, impacting fixed-costs recovery, partially mitigated by input-cost reduction”.

However, EBITDA and net losses improved for the category, with the former put down to “restructuring benefits, cost control and timing of marketing expenses”.

EBITDA losses narrowed to 60m pesos from a 116m peso loss in the first quarter of 2023, while the bottom line shrank to a 216m peso loss from last year’s negative 320m pesos.

For Monde Nissin’s APAC BFB business, which features brands such as Lucky Me noodles, SkyFlakes crackers and Nissin cookies, sale rose 2.2% to 16.9bn pesos.

Gross profit was up 26.5% at 6.5bn pesos. EBITDA climbed 28.7% to 4.6bn pesos, while net come came in 40.9% higher at 3.1bn pesos.

“The first quarter saw significant expansion in gross margin and overall profitability driven by our APAC BFB business,” CEO Soesanto said.

“Our APAC BFB margins and profitability have substantially rebounded from last year’s levels, and we believe, given current conditions, that the second quarter will continue to reflect these improvements.”