Tough trading conditions in Hong Kong have dulled the impact of Dairy Farm International’s transformation programme, despite solid sales growth in other markets.
The Hong Kong-headquartered and Singapore-listed retailer reported a 5-per-cent decline in group sales for the December year to US$11.2 billion, however sales including 100 per cent of its associated companies and joint ventures rose by 26 per cent, largely due to the investment in Robinsons Retail in the prior year.
Underlying profit attributable to shareholders was $321 million, representing a 10-per-cent decline. That was primarily due to social unrest in Hong Kong which disrupted trading at some of the group’s banners in the second half of the year, especially Mannings which was hampered by reduced ranks of Mainland China visitors.
“While difficult market conditions in Hong Kong impacted the group’s financial performance during the year, the multi-year transformation of the Dairy Farm Group continued to gain momentum during 2019, with signs of progress across our businesses,” said chairman Ben Keswick.
“The group’s space-optimisation plan, new store formats and improvement programmes together generated greater efficiencies and started to deliver tangible results.”
Keswick said he expected further progress this year, although trading is being materially impacted by the coronavirus outbreak.
“Performance for the remainder of the year will depend on the duration, geographic extent and impact of the outbreak and the measures taken to control it.”
However, he said Dairy Farm International’s diverse retail portfolio provides some insulation against market uncertainties.
Other factors affecting the group’s results last year included ongoing investment in the Ikea store network which was offset by “a significant improvement in profitability” in the company’s Southeast Asian grocery-retail business.
Dairy Farm International is midway through a multi-year transformation programme aimed at reshaping and reorganising the business and adapting to the changing needs of customers.
Keswick said opportunities are being unlocked across the group as the business seeks to leverage its scale effectively and develop “a more coherent approach to improving its customer proposition, both by banner and at a country level”.