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Sheng Siong's Q4 profit up 9.3%

SUPERMARKET chain Sheng Siong Group reported a 9.3 per cent rise in net profit for the fourth quarter, as government grants gave a boost to the group's bottom line.

For the three months ended Dec 31, 2017, net profit was S$16.8 million. Earnings per share (EPS) stood at 1.12 Singapore cents, up from 1.02 cents a year ago.

In Q4 2017, Sheng Siong received S$2.6 million in government grants, more than three times of the S$725,000 it received in Q4 2016. The government grants were from various government agencies in partial support of productivity improvement programmes as well as grants under the Wage Credit, Special Employment Credit and Temporary Employment Schemes.

The receipt of a few grants for productivity improvements in Q4 2017 was the main reason for the increase of S$1.8 million from Q4 2016, Sheng Siong said.

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The higher net profit in Q4 2017 was also due to higher revenue, higher gross profit, improved gross margin, and tax refunds. These were partially offset by higher operating expenses.

For Q4 2017, Sheng Siong reported a 6.3 per cent increase in gross profit to S$55.1 million. Revenue increased 1.7 per cent to S$200.3 million while gross profit margin was up 0.2 percentage points to 26.5 per cent in Q4 2017.

Sheng Siong said that the increase in distribution expenses of S$0.4 million in FY 2017 was caused mainly by the higher volume of business which led to increases in operating expenses like staff costs and the maintenance costs for the fleet of trucks.

It is proposing a final dividend of 1.75 cents per share, bringing the total dividend to 3.30 cents per share or equivalent to a payout ratio of around 71 per cent for FY 2017.

For the full-year ended Dec 31, Sheng Siong's net profit rose 11.4 per cent to S$69.8 million. EPS for FY 2017 was 4.64 Singapore cents, up from 4.17 cents in FY 2016.

Revenue for FY 2017 was up 4.2 per cent to S$830 million from the year before.

Sheng Siong said that 4.5 per cent of the increase in revenue for FY 2017 was contributed by the new stores, 2.1 per cent by comparable same store sales from the old stores, but was offset by a reduction of 2.4 per cent arising from the temporary closure of the Loyang Point store, and the permanent closure of The Verge and Woodlands Block 6A stores.

"Comparable same store sales improved in the second half of the year as consumers' sentiments improved probably because of Singapore's better economic performance and an increase in retail space," the group said.

It added that competition in the supermarket industry in Singapore is "expected to remain keen" among the traditional brick and mortar stores as well as the new and existing e-commerce players.

Despite that, the group believes that grocery retailing in physical stores will still be relevant, but could be complemented by online offerings, and will continue to source or bid to lease new stores.

Sheng Siong closed unchanged at S$0.925 on Thursday.