Koufu's H1 profits dive 82% on Covid-19 impact

PROFITS for food and beverage company Koufu Group dived 82 per cent to S$2.54 million for the six months ended June 30, as the Covid-19 pandemic took a big bite out of its earnings when Singapore's circuit-breaker measures kicked in.

Revenue decreased 23.2 per cent to S$88.97 million from a year ago, again largely due to the impact of the Covid-19 outbreak, with lower contributions from both the outlet and mall-management segment and food-and-beverage (F&B) retail segments.

Earnings per share stood at 0.46 Singapore cents for the half-year, down from 2.54 cents a year ago.

An interim dividend of 0.5 Singapore cent was declared, down from 1 cent previously. This will be paid out on Sept 3.

In the first half of the year, contributions from the outlet and mall-management segment, which makes up 53.7 per cent of the group's revenue, fell 19.4 per cent year on year to S$47.8 million in H1 2020. This was due to the decrease in fixed rental income as the group had passed on rental rebates to stall tenants and a decrease in variable rent due to lower footfall at most outlets.

The F&B retail segment, which contributed the other 46.3 per cent of the group's revenue, recorded a 27.2 per cent decrease to S$41.2 million in H1 2020. This was largely attributable to the lower footfall at most of the outlets, especially during the circuit-breaker period and Phase 1 of reopening, when dine-in was still not allowed. In addition, 10 food courts, three quick-service restaurants, two full-service restaurants and 26 R&B tea kiosks managed by the group had their operations temporarily suspended.

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Pang Lim, Koufu's executive chairman and chief executive officer, said that the group resumed operations for most of its outlets on June 19 under Phase 2 of the reopening; most of its food courts and coffee shops in the heartlands, tea kiosks and full-service restaurants have made "significant improvements".

In its outlook, Koufu expects to open a new food court in the second half of 2020 in Singapore, after having opened two new coffee shops in H1 2020 locally. Overseas, Koufu has secured the lease for a third food court in Macau, targeted to open in the second half of 2020.

On the F&B retail front, Koufu will focus on growing its R&B Tea and Supertea brands in its markets of Singapore, Macau and Malaysia. It also opened its first R&B Tea outlet in Indonesia on July 4, and has secured three leases for R&B Tea kiosks in Singapore, which are slated to open in the second half of 2020. It also plans to expand its other retail brands overseas.

The group is expecting to obtain the temporary occupation permit of its integrated facility by the second half of 2020. The facility will not only support the group's growing business needs, it also presents an opportunity to create and diversify income streams, said Koufu.

Barring any unforeseen circumstances, Koufu expects to remain profitable in the next 12 months.

Before the release of its half-year results, Koufu's shares closed at S$0.68 on Tuesday, down 1.5 Singapore cents or 2.16 per cent.