Neo Group's FY16 profit falls 42.9% to S$4.2m

NEO Group's net profit for the financial year ended March 31, 2016, fell 42.9 per cent to S$4.2 million, or 4.18 Singapore cents per share, compared to the preceding 14-month period, dragged down by weak retail and manufacturing segments.

The food caterer, which has changed its financial year-end from Jan 31 to March 31, is proposing a final dividend of one Singapore cent per share.

Neo Group posted a 62 per cent increase in revenue to S$125.4 million, largely driven by new acquisitions in the food manufacturing and food trading businesses.

But a sharp increase in expenses, including a 48.8 per cent expansion of employee benefit expenses, to S$37.4 million, and a 78.1 per cent rise in other expenses, to S$10.5 million, pushed the bottom line into negative growth.

Sales from food catering rose 9.4 per cent to S$62.7 million. Neo Group said it accounted for a 14.7 per cent share of the S$409 million catering industry in Singapore in 2016, up from 10 per cent in 2014, based on a study by Euromonitor.

Food retail sales fell 8.8 per cent to S$17.5 million amid challenging conditions in the restaurant space. Neo operates the Umisushi and Issho Izakaya chains of Japanese restaurants.

The Thong Siek Group, which makes the Dodo brand of fishballs, was acquired on June 12, 2015, and contributed S$37.3 million from 10 months of revenue. However, the food manufacturing business remained loss-making in fiscal 2016.

The company expects to remain profitable in the year ahead.