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Kimly Q2 net profit drops 13.2% to S$4.73m on higher expenses
CATALIST-LISTED coffeeshop operator Kimly's second-quarter earnings took a hit from higher expenses, even though it notched turnover growth on recent acquisitions, in results released on Tuesday.
Net profit came in lower by 13.2 per cent year-on-year to S$4.73 million for the three months to March 31 on the hit from selling and distribution, administrative and other expenses.
Revenue, meanwhile, went up by 4.7 per cent to S$51.5 million on contributions from restaurant chain Tonkichi and confectioner Rive Gauche, which were bought in July 2018.
Earnings per share slipped to 0.41 Singapore cent from 0.47 Singapore cent, while net asset value was 7.41 Singapore cents a share, against 7.68 Singapore cents as at Sept 30, 2018.
Competition, high rents and a labour crunch mean that the food and beverage (F&B) landscape is still challenging in Singapore, Kimly said in its outlook statement.
The group runs 68 eateries and 130 food stalls islandwide.
But it also noted that it has productivity and efficiency drives under way, including the upgrading of its central kitchens, for which funds came out of initial public offering proceeds.
"The group will continue to direct its efforts in using technology to further strengthen the synergy between its outlets and central kitchens," it said, noting that the Rive Gauche central kitchen would be moved to the parent headquarters in Woodlands.
Kimly added that the share of online delivery sales has risen to about 2 per cent of revenue in the first half, compared with 1 per cent of total revenue for the whole of the previous year.
It is also developing its own iced coffee and tea brands "to cater to the growing preference for healthier F&B options, including lower sugar content", with the new drinks ready for launch by the third quarter.
Meanwhile, net profit for the six months was down by 10.7 per cent to S$10 million, even as revenue grew by 4.9 per cent to S$104.1 million for the period.
The board has recommended an interim dividend of 0.56 Singapore cent a share, against 0.28 Singapore cent in the same period the previous year.
Justifying the decision, it said that "despite the challenging local F&B environment, the group remains profitable for H1 FY2019 and is in a healthy net cash position". The group had S$86.5 million in cash and equivalents, and no borrowings, as at March 31.
Kimly closed flat at S$0.245 on Tuesday before the results were announced.