Japan Foods Holding announced that its 1HFY2020 earnings have dropped by 80.2% to $0.3 million, compared to $1.5 million a year ago, as a result of the negative consequences from the Covid-19 pandemic.
Revenue for the first half of the financial year ended September came in at $18.5 million, 48.7% lower than $36.1 million a year ago, mainly due to the impact arising from Covid-19, as dining-in was ceased for two months in all of the group’s outlets during the circuit breaker period.
Although all of the group’s outlets have resumed operation since Singapore moved into Phase 2, but the group’s revenue did not recover to pre-Covid-19 levels due to lower footfall in shopping malls, especially for those restaurants located in the Central Business District areas. The implementation of social distancing measures, travel restrictions, work-from-home arrangements and the onset of an economic downturn contributed to the drop in revenue.
With cost of sales also decreasing by 48.1% y-o-y to $2.9 million, gross profit for the period came in at $15.7 million, 48.8% lower than $30.6 million last year.
During this period the group received other income of $8.2 million, a significant increase from just $0.2 million in the previous year, mainly due to additional government grants amounting to $2.8 million arising from the Jobs Support Scheme and foreign workers’ levy rebates and receipt of rental concessions of $5.3 million.
Overall, expenses decreased, with selling and distribution expenses dropping 18.4% y-o-y to $21.1 million; administrative expenses falling 19.6% y-o-y to $1.4 million; and other operating expenses declining by 37.2% y-o-y to $0.5 million.
The board has declared an interim dividend of 0.75 cent per share, which is lesser than 1.0 cent declared last year.
See: Appetite grows for Japan Foods' brand despite concerns about its joint ventures
To recap, Japan Foods is in a joint venture with Minor Singapore to bring the Thai Express brand to Japan. But the pandemic has put a hold on the group’s overseas expansion plans.
Hence, it will be focusing its efforts and resources on recovery in its domestic market.
Now, Japan Foods and Minor will be planning to debut their first joint concept known as “Pizzakaya” in VivoCity.
Separately, the group will also be unveiling its first self-developed Halal concept restaurant at Tampines Mall, which it is currently in the process of obtaining Halal certification for. To be named “Tokyo Shokudo”, all the food preparation will be done at the restaurant’s Halal kitchen instead of at the Group’s central kitchen which supplies ingredients to its other stores.
Both stores are expected to commence operations in Nov 2020.
Takashi Kenichi, executive chairman and CEO of Japan Foods says, “The Covid-19 pandemic and government-imposed Circuit Breaker to curb the spread of the virus was devastating to the F&B industry especially between the months of April and June 2020. While our business has picked up since measures were gradually lifted from June 2, 2020, we are still not operating at full capacity because of safe distancing guidelines.”
“Our earnings have taken a beating, but rather than focusing on what is beyond our control, we have used this lull period to develop new concepts that can be rolled out once business activities pick up,” he adds.
Notwithstanding the gradual resumption of business activities, the group expects the negative economic impact of the Covid-19 pandemic to continue for some time to come.
Shares in Japan Foods closed at 30 cents on Nov 4, dropping 35% YTD.
