Groceries, furnishings underpin profit for Dairy Farm Group
Declining health-and-beauty and convenience-store sales and a subdued Maxim’s food business took the shine off solid performances in grocery retailing and at Ikea during Dairy Farm Group’s first half year.
In the six months to June, Dairy Farm Group recorded a 40-per-cent drop in underlying profit and a 9-per-cent decline in sales from subsidiaries, despite strong performances by its grocery and homewares (Ikea Hong Kong and Taiwan) divisions. Combined sales, including those of its subsidiaries, were up 6 per cent to US$14.5 billion, thanks to stronger contributions from Robinsons Retail in the Philippines and the Yonghui supermarket chain in Mainland China.
Total underlying group profit was $105 million, compared with $177 million in the same period last year.
Chairman Ben Keswick said the reduced profits were due to the impact of Covid-19 on customer behaviour. “Trading conditions in the second half are expected to continue to be challenging, but we are confident in the strength of Dairy Farm’s businesses and remain committed to its multi-year transformation plan.”
Highlights of the half year included what Keswick described as a “strong turnaround momentum” in the grocery-retailing division in Singapore and Malaysia. “The performance of new upscale formats and refreshed stores in Southeast Asia was also encouraging,” he said.
However market conditions in Indonesia remained challenging.
At Maxim’s, the operator of Starbucks franchises across the region along with bakeries and other food outlets, and half-owned by Dairy Farm Group, sales were significantly affected by reduced customer numbers due to social-distancing mandates, and the temporary closures of some outlets, leading to a half-year loss.
“Performance has progressively improved over the course of the second quarter, in line with the easing of social-distancing restrictions, but any return of restrictions which reduce customer levels or require further closures of its outlets will impact future performance,” said Keswick.