Sheng Siong posts 12% rise in Q1 net profit
Singapore
SUPERMARKET operator Sheng Siong Group has posted a 12.2 per cent jump in net profit to S$14.06 million for the first quarter ended March 2015 from a year ago on higher revenue and improved gross margin.
Revenue improved nearly 5 per cent to S$198.4 million from S$189.7 million, owing to two new stores - one in Penjuru and the other in Tampines Central - and comparable same store sales growth.
Earnings per share for the period under review stood at 0.94 Singapore cents, up from 0.91 Singapore cents a year ago.
No dividend was recommended for the period, just like the previous year.
The company, one of the largest supermarket chains in Singapore, said that it began its first quarter with healthy revenue growth over the Chinese New Year season but this faded in March due to " sluggish post-festive demand", the same tepid conditions which had prevailed through most of fiscal 2014.
While revenue growth at its store in Bedok Central store has recovered, growth remained flat at the Tekka store, it said in a statement.
Gross margin increased to 24.4 per cent for the first quarter, from 23.8 per cent for the year-ago period, which the company attributed to a reduction in input costs derived from the distribution centre.
Sheng Siong expects the industry to remain competitive while upward pressure on manpower cost would persist due to the government's restriction on foreign labour supply.
"The key driver of our strategy is to expand our retail space in Singapore, particularly in areas where we do not have a presence," said Sheng Siong chief executive Lim Hock Chee.
"We recently signed leases for two new stores totalling 8,580 square feet. With the opening of these stores in May 2015, the group's total retail area will expand by another 2 per cent to 422,400 sq ft," he added.
The two new leases were secured from the Housing and Development Board at Bukit Panjang and Punggol. The company has also succeeded in bidding for another HDB shop at Pasir Ris and is awaiting the granting of the lease.
However, it added that finding suitable retail space for new stores remained a challenge.
