Sheng Siong's Q2 profit up 23.1%, muted outlook

Singapore

SUPERMARKET chain Sheng Siong Group on Thursday said that its net profit for the second quarter ended June 30 jumped 23.1 per cent to S$13.6 million, from S$11.1 million in the year-ago period.

The group's gross margin has improved steadily over the past few quarters, mainly due to lower input costs arising from better buying prices and efficiency gains derived from its central distribution centre at Mandai.

The improvement of sales mix in favour of fresh produce was another contributing factor, Sheng Siong said in a statement.

Revenue inched up 4.3 per cent to S$179 million, from S$171.6 million, of which 4 per cent was contributed by the inclusion of five new stores since the year ago period, and 0.3 per cent by comparable same store sales from existing stores.

Despite the positive Q2 results, Sheng Siong acknowledged that competition in the supermarket industry has intensified lately with more promotions being offered - some in conjunction with SG50.

"Demand remains tepid and this is likely to persist so long as the local economic conditions continue to remain lacklustre," the group said.

The group plans to renovate one of its older stores located in a mature housing estate in the second half of FY2015, as it has seen declining sales.

Meanwhile, another Sheng Siong store at Loyang Point will be closed in the second quarter of 2016, as the Housing and Development Board is renovating the complex. The store is expected to re-open in the second quarter of 2017 when renovation is completed, with a larger area of approximately 8,000 square feet.

Sheng Siong's chief executive Lim Hock Chee said in a statement: "We remain committed to our store expansion plans, particularly in locations where we do not have a presence, so as to reach out to our customers. At the same time, we will continue to nurture the growth of both our new and old stores, improve the sales mix and work towards reducing input costs by capitalising on our Mandai distribution centre."

For the quarter ended June, earnings per share were 0.91 Singapore cent while net asset value was 16.06 Singapore cents.

A dividend of 1.75 Singapore cents per share was declared for the quarter.

Before the results were announced, the counter closed down 1.14 per cent, or one cent, at 86.5 Singapore cents.