Yeo Hiap Seng narrows H1 loss to S$1.2m

BEVERAGE maker Yeo Hiap Seng (YHS) posted a net loss of S$1.21 million for the six months ended June 30, narrowing from the S$6.73 million loss reported in the year-ago period.

The heritage brand attributed the improvements to double-digit growth in its core food and beverage revenue, and "positive momentum from key overseas markets".

However, it acknowledged that the operating environment for its home markets of Singapore and Malaysia, as well as the neighbouring region, remains uncertain due to new waves of Covid-19 infections.

Group revenue for H1 2021 grew 4.2 per cent to S$169.3 million, of which core F&B revenue rose 14.4 per cent to S$153.8 million year-on-year.

Across key markets, growth momentum was strongest in Malaysia, China, and Hong Kong, with revenue from these regions rising 21 per cent year-on-year.

"This is especially encouraging given Malaysia's position as one of our home markets and major revenue contributor to the group, while China (includes mainland China and Hong Kong) is one of our focus markets driving our next phase of growth," YHS said in a bourse filing after trading hours on Tuesday.

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It also highlighted double-digit growth in Vietnam, albeit coming off of a lower base due to it being a newer market.

The group remains "cautiously optimistic" about momentum from higher-growth markets, while noting the challenges it faces with ongoing movement restrictions.

"Governmental measures such as the capacity limitations on dining-in at F&B establishments, various degrees of lockdowns and movement controls not only might impact the demand on Yeo's products, but might pose supply chain and production challenges, as the group has significant production operations in Malaysia.

"The group also potentially faces labour shortages at our production facilities from time to time as governmental measures, which evolve with the pandemic situation, restrict workers' movement," it noted.

YHS' S$30 million joint investment with Swedish oat milk company Oatly, in equipment and facility to produce the oat beverage for Asia, has started commercial production in July, YHS said in its Tuesday filing. YHS is Oatly's first Asia supplier.

As at June 30, 2021, YHS has cash and cash equivalents of S$251.1 million and no bank borrowings.

YHS shares closed flat at S$0.90 on Tuesday, before the announcement of results.

@KellyNgBT