Dismal results from Metro, FJ Benjamin

Singapore

PROPERTY and retail group Metro Holdings reported a second-quarter net profit of S$18.57 million, down nearly 70 per cent, due to a lower share of profits from associates and joint ventures.

This was despite a 22.3 per cent rise in revenue to S$38.31 million, thanks to higher turnover from its retail operations as its new store at Centrepoint started operations as well as from higher contributions from existing stores.

Earnings per share for the quarter came to 2.2 Singapore cents, down from 7.4 cents a year ago.

Gross profit for the quarter was about 7.8 per cent lower at S$2.06 million as cost of revenue increased about 25 per cent to S$36.25 million. Profit from operating activities came to S$8.83 million versus a loss of S$14.6 million in the corresponding quarter a year ago.

Share of results of associates plunged from S$64.14 million to S$5.47 million as the corresponding quarter a year ago included a gain of S$64.2 million from negative goodwill on acquisition of associates. S$59.3 million of the negative goodwill arose from the recognition of Top Spring as an associate on 1 July last year.

Similarly, share of results of joint ventures dropped to S$5.12 million from S$12.36 million as the financial quarter last year included a fair value gain of S$8 million on EC Mall, which was sold in April this year.

For the half year, net profit slid 21.4 per cent to S$56.11 million, while revenue rose nearly 30 per cent to S$81.02 million.

Shares in Metro closed at S$0.905 on Wednesday, unchanged.

Meawhile, retailer FJ Benjamin, which also released its financial results on Wednesday, sank into the red with a net loss of S$5.47 million for 1QFY16, versus a net profit of S$1.11 million a year ago.

Turnover dropped 15 per cent to S$63.7 million amid headwinds in the region's retail sector, such as softening tourist arrivals, currency volatility, poor consumer sentiment as well as the effects of the haze. Loss per share clocked 0.96 Singapore cent, versus earnings per share of 0.19 cent a year ago.

Gross profit fell 24 per cent to S$24.94 million, while gross percetage declined 4.6 percentage points from 43.8 per cent last to 39.2 per cent for the quarter under review. The drop was due to higher discounts in the timepiece wholesale business and the sales mix of retail and wholesale.

Group operating loss came to S$3.15 million, versus an operating profit of S$0.66 million a year ago. The bottom line was also dragged down by S$1.85 million in foreign exchange losses.

"Given the uncertain global economic outlook and intensifying competition, the group expects the retail sector in its key markets of Singapore, Malaysia and Indonesia, to remain challenging in the mid-term," FJ Benjamin said.

Efforts to right-size its operations are expected to be completed by end 2Q16.

Shares in FJ Benjamin closed at S$0.086 on Monday. Its shares were not traded on Wednesday.