Dairy Farm full-year net profit falls 16% to US$271m

DAIRY Farm International on Thursday reported a full-year net profit of US$271 million, a fall of 16 per cent from a year ago, even as total sales increased 2 per cent to US$28.2 billion.

For the year ended Dec 31, 2020, the group said it recorded strong growth in operating profit for its grocery retail segment and Ikea, but this was offset by lower profits for the health and beauty as well as convenience businesses.

In particular, the group noted that the disruption caused by the Covid-19 pandemic had had the greatest impact on its health and beauty business in Hong Kong. This was as enforced border closures in North Asia led to a virtual elimination of tourists, most notably from the Chinese mainland, which significantly impacted the group's Mannings business in Hong Kong and Macau.

To mitigate the impact, Dairy Farm said that "price investment campaigns" have been introduced across key markets, with "encouraging" results so far. The group is also managing costs "appropriately".

Overall, the group's subsidiaries recorded underlying operating profit of US$412 million, a decline of 6 per cent from the previous year.

Meanwhile, the group brought down net debt to US$817 million at the end of 2020, from US$821 million at the end of last year.

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Dairy Farm is recommending a final dividend of 11.5 US cents per share, meaning a total dividend of 16.5 US cents per share for the year, 21 per cent lower than that for 2019.

Shares of Dairy Farm closed flat at US$4.68 on Thursday before the announcement.