Retailer Dairy Farm pares dividend as H1 earnings fall 69.5% to US$32.1m

THE first-half earnings of Jardine-owned Asian retail giant Dairy Farm International tumbled on the back of seesawing shopper behaviour during the Covid-19 pandemic, prompting the company to warn on Thursday that the outlook for the year remained glum.

Underlying net profit, which excludes non-trading items, fell by 69.5 per cent to US$32.1 million for the six months to June 30, from US$105.1 million in the year before, on lower contributions from the key grocery segment.

Sales were down by 13.4 per cent to US$4.54 billion, owing in part to the divestment of Wellcome Taiwan and Rose Pharmacy in the Philippines.

Dairy Farm also suffered a loss of US$43.6 million in its share of results from associates and joint ventures, compared with a profit contribution of US$4.4 million before; this was mainly because key Chinese grocery associate Yonghui saw not just lower sales from consumer volatility, but also thinner margins from stiffer online competition.

Granted, Hong Kong restaurant associate Maxim's narrowed its losses, and convenience stores posted earnings growth on an improved Covid-19 situation in mainland China, but these boosts was not enough to offset the lower profitability in other segments, especially as consumer behaviour calmed down - compared to the panic buying in 2020, said Dairy Farm.

Net profit fell to US$16.7 million, from US$115.3 million before, as non-trading items swung into a loss on widening business restructuring costs.

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Dairy Farm chairman Ben Keswick said in a statement: "Ongoing pandemic-related restrictions have significantly affected trading in all markets, impacting the group's overall performance in the period.

"There remains significant uncertainty as to the future impact of the pandemic on Dairy Farm's businesses, and trading conditions in the second half are likely to remain challenging."

Earnings per share fell to 1.24 US cents, from 8.53 US cents before; underlying earnings per share dropped to 2.38 US cents, from 7.77 US cents previously.

The board has declared an interim dividend of US$0.03 a share, compared with US$0.05 previously. Books close on Aug 20 and the payout will be made on Oct 13.

Dairy Farm, which is listed in London with secondary listings in Bermuda and Singapore, closed lower by US$0.03 or 0.75 per cent at US$3.98, before the results.