Dairy Farm International Holdings (DFI) has reported earnings of US$17 million ($23.1 million) for the 1HFY2021 ended June, an 85% plunge from US$115 million the year before.
This translates to earnings per share (EPS) of 1.24 US cents, compared to 8.53 US cents the year before.
“Ongoing restrictions related to the Covid-19 pandemic imposed by governments across our markets have significantly affected trading in all markets, impacting the Group’s overall performance in the period,” DFI Chairman Ben Keswick said in its results announcement on July 29.
DFI’s sales declined 13% y-o-y to $4.5 billion, due to lower grocery retail sales compared to the previous year during the onset of the pandemic.
The lower sales, in addition to the loss of contributions from Wellcome Taiwan and Rose Pharmacy in the Philippines, which the group divested, resulted in lower total combined sales - which include contributions from joint ventures and associates - of US$14 billion, down 4% y-o-y.
DFI has declared an interim dividend of 3 US cents per share, a 40% decrease from 5 US cents declared in 1HFY2020.
Underlying profit for the group’s subsidiaries in the period was US$76 million, a reduction of US$25 million on the same period last year, which DFI attributes to the “more normal” shopping behaviour as well as the annualisation of government support received in the prior year.
Convenience Stores, which experienced adverse trading conditions in 2020, saw a significant improvement in profitability in the first half of 2021. This was not, however, sufficient to offset lower profitability reported by the group’s other subsidiaries.
There was an improvement in performance from Maxim’s, which recorded a lower loss than the same period last year despite reduced level of Government support compared to the prior year.
The group’s associates and joint ventures made a loss overall, due to the group’s share of losses from Yonghui. Consequently, the total underlying profit for the Group was US$32 million, a 69% reduction y-o-y from US$105 million previously.
The Health and Beauty Division continued to be significantly impacted by the ongoing pandemic and the prolonged closure of the border between Hong Kong and the Chinese mainland. The performance of Mannings in North Asia continued to be significantly affected by the lack of custom from tourists in Hong Kong. In Southeast Asia, heavy restrictions on movement resulted in a significant reduction in footfall in malls, which continued to materially impact sales and profitability.
Despite the ongoing pandemic, DFI says it has progressed in executing its key transformation initiatives. This includes the relaunch of its Chinese Own Brand range Yu Pin King, the growth in yuu Rewards members in Hong Kong to 35 million, and upgrading of store formats.
In May, the group’s 89.3%-owned subsidiary in Indonesia, PT Hero, announced that, following a strategic review, it will be pivoting its trading operations by increasing investment in its strong brands of IKEA, Guardian and Hero Supermarkets and away from the Giant banner.
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Looking ahead, DFI says businesses and trading conditions in the second half of the year are like to “remain challenging” given uncertainties surrounding Covid-19. “Nevertheless, Dairy Farm remains committed to its multi-year transformation and we are confident in the Group’s ability to continue to adapt and achieve long-term sustainable growth,” the company says.
Shares in DFI closed 3 US cents or 0.75% lower at US$3.98 on July 29
Photo: Bloomberg
