Sheng Siong Q3 net profit dips 9.4% on higher staff, administrative costs

SHENG Siong Group saw its net profit dip 9.4 per cent to S$17.8 million for the third quarter ended Sept 30, mostly due to an increase in administrative expenses and staff costs as more stores were opened.

Revenue went up 8 per cent to S$227.9 million, with new stores again the major source of growth.

Earnings per share stood at 1.19 Singapore cents for the quarter, down from 1.31 cents a year ago.

There was no dividend declared.

In a filing to the Singapore Exchange, Sheng Siong said that competition in the supermarket industry is expected to remain keen, particularly with the increase in the number of new HDB shops and large online retailers.

It said that weather conditions or other disruptions in the supply chain may affect supplies and may drive up the group's input costs which will impact gross margin if the increase cannot be passed on to customers. Input prices may also be affected by the adverse developments in the current threat to free trade.

The group opened two new stores at Block 573 Woodlands and Junction 10, 1 Woodlands Road this month. Another new store at Block 451 Bukit Batok, which was secured in an HDB online bidding recently, should be operational in November 2018, bringing the total store count to 54, excluding the store in China.

Sheng Siong said that the group will "nurture the growth of these stores despite the different and challenging market dynamics".

It is also still looking for suitable retail space in Singapore, particularly in areas where the group does not have a presence. However, competition for retail space, particularly for new HDB shops, is expected to remain keen, it added.

The group will also be nurturing the growth of new stores in Singapore and China.