CATALIST-LISTED restaurant groups Tung Lok Restaurants and Japan Foods Holding (JFH) separately issued profit warnings on Friday (Oct 25), underscoring the challenges that restaurant operators are facing.
The food businesses warned that they expect to incur net losses for the half-year ended Sep 30, 2024, with both noting the challenging economic environment. They did not comment on the extent of the losses.
Tung Lok had registered a net profit in the year-ago period, as well as the preceding six-month period ended Mar 31, 2024, which closed its previous financial year.
It said the net loss in the most recent financial H1 was due to a drop in revenue as a result of the challenging economic environment, which has affected overall sales.
But it added: “Traditionally, the group’s performance in the first half of the financial year (April to September) is weaker than that of the second half of the financial year (October to March).”
Meanwhile, JFH attributed its latest half-year’s loss to two main factors: higher selling and distribution expenses compared with the year-ago period; and the provision for impairment loss on a loan to its joint venture company.
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It had posted a slight profit in the year-ago period, but a loss in the previous half-year ended March 2024.
On its selling and distribution expenses, JFH noted increases in the depreciation charges of plant and equipment and right-of-use assets, manpower cost and utilities expenses.
As for the joint venture company, Dining Collective, JFH has, together with its joint venture partner, decided to wind down the business after assessing its outlets’ performance and the challenging market conditions. The group thus expects an impairment charge of approximately S$0.7 million in the H1 ended Sep 30, 2024.
The information announced by both companies is based on preliminary assessments of unaudited financial results, which are being finalised. Tung Lok added that its results will be released on or before Nov 14.
On Friday, shares of Tung Lok closed at S$0.115, up S$0.001 or 0.1 per cent; and shares for JFH ended flat at S$0.34 before the announcement.
