[SINGAPORE] Supermarket operator Sheng Siong recorded a 6.1 per cent increase in net profit to S$38.5 million for the first quarter ended Mar 31, from S$36.3 million the year before.
Revenue grew 7.1 per cent to S$403 million, from S$376.2 million in the corresponding period last year. This was thanks to contributions from eight new stores opening in the quarter and FY2024, as well as higher festive sales during Hari Raya in March, said the company in a business update on Tuesday (Apr 29).
Gross profit consequently rose to S$122 million in Q1, a 10.2 per cent increase from the S$110.7 million posted the year prior.
Earnings per share stood at S$0.0257, up 6.2 per cent from S$0.0242 in the year-ago period.
The improved performance came despite operating costs rising 12.4 per cent to S$81.6 million. This was mainly due to an 8.8 per cent year-on-year increase in administrative expenses to S$15.8 million, and a 13.3 per cent rise in selling and distribution expenses to S$65.8 million.
Sheng Siong attributed these to higher staff costs from higher variable bonuses, which was in turn from a better financial performance, enhanced employment benefits and more employees hired for the new stores.
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Cash flow from operating activities fell by S$10.1 million, from more payments being made to banks and vendors during the quarter. Still, cash flow generated in the quarter rose by 3.8 per cent from the year before to S$366.9 million.
Sheng Siong chief executive officer Lim Hock Chee predicts continued macroeconomic uncertainty amid geopolitical tensions.
“Under this unpredictable environment, consumers will remain cautious and continue to prefer value-driven supermarkets and affordable house brand products,” he said. “Government support measures, including various vouchers and financial subsidies, will help to maintain consumer spending momentum and benefit supermarket sales.”
Lim cited the attracting and retaining of qualified staff, increased investment costs and enhanced regulatory reporting as likely challenges that will strain the business margins of the retail industry.
“To navigate the complex environment, the group will continue to examine and expand its supply chain, refine the sales mix and focus on its core competence to optimise operational efficiency and productivity,” he said.
“Despite the external challenges, we remain confident in our ability to grow and strengthen our presence in the years ahead.” For instance, six additional retail locations have been secured and are expected to open by the third quarter of this year. The group is awaiting the results of another four tenders.
“We continue to monitor suitable opportunities to expand our network and which align with our long-term strategy,” said Lim.
Sheng Siong stocks closed at S$1.74 on Tuesday, down 0.6 per cent or S$0.01, before the news.
