BreadTalk Group has moved beyond merely making a crust, with breakthrough profits for its third quarter to the end of September.
This was despite a challenging retail environment, says the F&B group which recorded a 139.5 per cent explosion in net profit to S$16.8 million (US$12.3 million) for the period. It attributes its success to an “unwavering focus” on assessing and re-organising its business portfolios while identifying new growth opportunities.
“Our core F&B net profit increased fivefold to $12.1 million for the quarter, signifying the underlying strength of our core businesses,” says BreadTalk Group chairman Dr George Quek.
Last month the company won the World Branding Awards for the third time.
Meanwhile, group revenue for the first nine months of this year declined 2.6 per cent year-on-year to $449.5 million. At the same time, EBITDA rose 9.1 per cent to $64.9 million, with EBITDA margin improving to 14.4 per cent from 12.9 per cent for the same period a year ago.
In quarter one, there was $9.3 million in net capital gain from the divestment of the group’s investment in TripleOne Somerset, as well as $8.8 million from the divestment of 112 Katong Mall.
In line with overall group strategy, BreadTalk’s consolidated food-atrium portfolio in China and Singapore showed robust recovery. The vacancy rate across the portfolio remained at a record low of less than 2.5 per cent.
EBITDA for the division rallied by 127 per cent to $17.7 million, with EBITDA margin improving by 9.3 points to 15.7 per cent. However, with the closure of three underperforming stores in China, total revenue declined 6.9 per cent to $112.4 million. It now has 54 outlets.
For BreakTalk’s restaurant division, total revenue grew by a steady 2.5 per cent to $104.8 million, driven mainly by its Din Tai Fung restaurants in Singapore and Thailand. Overall EBITDA improvement 7 per cent to $22.3 million, with EBITDA margin rising by 0.8 points to 21.2 per cent.
Weaker performance by directly run stores in Beijing, Shanghai and Singapore eroded bakery division revenue by 2.7 per cent to $223.1 million. While these stores were unchanged at 255 outlets, 15 more franchise outlets were added to reach a total of 604.
In September, the group signed a sale-and-purchase agreement for its business with United Malayan Land. This will enable the group to take advantage of the developer’s experience in the Malaysian property market.
EBITDA for the division declined 13.3 per cent to $18.7 million, with margin at 8.4 per cent (9.4 per cent previously).
BreadTalk formed 4orth Division this year to identify F&B opportunities, and is led by group CEO Henry Chu. It converted five RamenPlay outlets to So Ramen by the end of September, which are now generating 8.5 per cent improvement in revenue to reach $658,000 from August to September.
In July, the division entered into a 90-10 JV with Song Fa Holdings to introduce the Bak Kut Teh brand to China and Thailand.