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Sheng Siong posts net profit of S$20.6 million on new stores sales, higher gross margin

DRIVEN by the contribution from new stores, revenue of supermarket chain Sheng Siong Group rose 11.4 per cent to S$253.8 million. Together with improved gross profit margin, the higher top line lifted net profit by 16.4 per cent to S$20.6 million for the third quarter ended Sept 30.

In its statement released on Wednesday, the supermarket chain posted better performance for the quarter despite weaker same store sales.

The chain has 59 outlets in Singapore and two in China. While it did not open any new outlet in the third quarter, the 13 stores that were added in 2018 and first half of this year had contributed to the 11.4 per cent increase in revenue from S$227.9 million to S$253.8 million. Additionally, gross profit margin improved 0.6 percentage point from 26.5 per cent to 27.1 per cent because of a slightly higher sales mix of fresh versus non-fresh produce and lower input cost from higher suppliers' rebates.

As a result, net profit rose by 16.4 per cent from S$17.7 million to S$20.6 million. Earnings per share stood at 1.37 Singapore cents, 15.1 per cent higher than the 1.19 Singapore cents for the corresponding period a year ago. No dividend was declared this time, as was for the corresponding period a year ago.

The company, however, noted that consumer sentiment seemed to have deteriorated in the past few months amid keener competition from new stores in the market. Also, it flagged that its supply chain may be disrupted by weather conditions or other factors, and thereby may drive up input costs if the increase cannot be passed on to the customers.

The company is closing the store at Thomson Imperial Court in December as negotiations have failed to reach an agreement on lease renewal. But it will open a store in Marsiling Drive by the first quarter next year.

The company's shares ended 0.87 per cent or one Singapore cent down at S$1.14 on Wednesday, before the financial results were released.

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