Japan Foods H1 profit falls 96.5% to S$81,000 on higher operating expenses
Michelle Zhu
JAPAN Foods posted a net profit of S$81,000 for the first half ended September, representing a 96.5 per cent decline from S$2.3 million in the previous year.
Earnings per share fell 96.3 per cent to S$0.0005, from S$0.0134 a year earlier.
On Friday (Nov 10), the food and beverage group said this was mainly due to a net increase in operating expenses from its expanded restaurant network, coupled with the provision of a one-off S$791,000 impairment loss.
The impairment loss was related to a loan made to its joint-venture company with Minor Food Group Singapore, to operate a Siam Smith brand restaurant in Tokyo. This Tokyo restaurant ceases operations this month, felled by “adverse operating conditions” in the market, said Japan Foods.
Revenue for the half year grew 13.2 per cent to S$43 million from S$38 million a year prior, boosted mainly by higher contributions from the group’s halal segment.
In line with the topline increase, gross profit climbed 12.8 per cent to S$36.3 million from S$32.2 million. Gross profit margin, however, fell 0.3 percentage point to 84.4 per cent over the half-year period due to higher materials costs.
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Selling and distribution expenses grew 21 per cent on the year to S$32.7 million from S$27 million as a result of higher manpower costs, utilities expenses, as well as depreciation charges of plant and equipment and right-of-use assets.
Administrative expenses rose 10.6 per cent to S$2 million from S$1.8 million, as a result of higher manpower costs with the group’s expanded business operations.
Takahashi Kenichi, executive chairman and chief executive of Japan Foods, said: “To lay the groundwork for future growth, Japan Foods has been on expansion mode since the lifting of Covid-19 restrictions in April 2022. As a result, we incurred higher capital expenditure and our operating expenses rose in line with our expanded business activities.”
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The group has proposed an interim dividend of S$0.003 per share for the current financial period, down from its S$0.01 per-share dividend for H1 in the previous financial year.
Japan Foods said it expects the next 12 months to be challenging due to prevailing conditions faced by the food and beverage industry, such as “intense competition, a manpower crunch and rising cost of operations resulting from inflationary pressures”.
To mitigate such challenges, the group said it will continue to focus on controlling raw materials costs, and on improving operational efficiency by streamlining work processes and adopting technology.
Shares of Japan Foods closed flat on Thursday at S$0.355.
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