BreadTalk's aim for 8% profit margin by 2022 won't be a walk in the park
GEORGE Quek is laser-focused on attaining a net profit margin of 8 per cent for BreadTalk Group by 2022 but is the chief executive of the food and beverage player biting off more than he can chew?
Let's drill down to the numbers. According to chief financial officer Chan Ying Jian, BreadTalk's top line is expected to be lifted by about 10 per cent from contributions by the newly acquired Food Junction. This would give it an estimated top line of S$715 million for 2020.
Assuming it achieves an incremental two percentage points in net profit margin every year, that is, 4 per cent for 2020, 6 per cent for 2021 and 8 per cent for 2022, with revenue staying flattish at S$715 million, its net profit would amount to S$28.6 million, S$42.9 million and S$57.2 million for 2020, 2021 and 2022 respectively. How realistic is that?
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