Japan Foods swings back to profitability in H2, proposes 1.75 S cents final dividend

CATALIST-LISTED restaurant operator Japan Foods returned to profitability in the second half-year ended March 31, 2021, reporting S$3.3 million in earnings as opposed to a loss of S$0.5 million in H2 FY2020.

The group has proposed a final dividend of 1.75 Singapore cents per share, up from 0.25 cent for FY2020. Together with the interim dividend of 0.75 cent per share paid out in December 2020, this brings the total dividend to 2.50 cents per share, or 120.1 per cent of FY2021 net profit.

In its results filing on Tuesday, Japan Foods attributed its improved H2 performance to the easing of dining restrictions at the end of Singapore's "circuit-breaker" period last year.

Revenue for H2 edged up 0.5 per cent to S$32.5 million on-year from S$32.3 million, due to the end of the "circuit-breaker" period and subsequent reopening of all the group's restaurants from June 19, 2020.

Overall group sales performance further improved when more restrictions were relaxed on Dec 28, 2020 to permit larger groups of eight to dine in, said the group.

Gross profit margin for the half-year period improved to 84.9 per cent, from 84.2 per cent the previous year.

Japan Foods noted in its results announcement that post the "circuit-breaker" period, its restaurants located in heartland malls had generated higher sales revenue over H2, while those located in the Central Business District and near the Orchard Road district had yet to recover to pre-Covid-19 levels due to lower footfalls in these areas.

Executive chairman and chief executive Takahashi Kenichi said this was because most workers were still working from home and had yet to return to their offices as at March 31 in large numbers.

"We believe that working remotely may continue to be the new norm even after the COVID-19 pandemic is over and we will seek out opportunities according to trends that emerge from this situation to drive growth for our domestic market," said Mr Kenichi.

For FY2021, the group's earnings more than tripled year on year to S$3.6 million from S$1 million. This came despite a 25.4 per cent drop in full-year revenue to S$51 million, from S$68.4 million in FY2020, cushioned by government grants and rental concessions.

The counter closed flat at S$0.39 on Tuesday, after Japan Foods released its financial results.