Old Chang Kee posts 11.1% rise in 3Q earnings to $1.4 mil on higher sales

SINGAPORE (Feb 13): Old Chang Kee posted a 11.1% rise in 3Q earnings to $1.4 million from $1.2 million a year ago on higher sales.

Revenue for the three months ended Dec rose 7.5% to $20.3 million from a year ago.

Revenue from retail outlets increased by 7.0% or $1.3 million. The increase in revenue was mainly due to revenue contribution from new outlets, partially offset by lower revenue from existing outlets, and absence of revenue from temporary closure of outlets due to mall revamps.

Revenue from other services, such as delivery and catering services increased by $98,000 or 58.9%, mainly due to higher sales generated from food delivery services.

As at Dec 31, the group operated a total of 88 outlets in Singapore as compared to 82 outlets a year ago.

The group’s signature puff products remained the major contributor to its revenue and accounted for 32.7% of the group’s revenue in 3Q17, as compared to 31.5% in 3Q16.

Cost of sales increased by $278,000 or 3.9%. The increase was mainly due to the higher revenue generated by the group.

The group’s gross profit increased by $1.1 million or 9.6%.

The group's gross profit margin increased from 62.6% in 3Q16 to 63.8% in 3Q17, mainly due to improved factory efficiency in 3Q17, such as lower production-related depreciation, raw materials and production staff cost as a percentage of revenue in 3Q17.

Other income increased by $14,000 mainly due to a gain on disposal of motor vehicle of $19,000.

Looking ahead, the group expects operating lease expenses (rental) and labour and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labour market will continue to remain tight.

Retail conditions will continue to be challenging amidst mall revamps and with new entrants in the food and beverage market.

The group believes that its new factory in Singapore when completed and fully operational in the later part of 2017, together with its Malaysia factory, will provide the platform for the group to grow its business both locally and regionally, while keeping cost under control.

Share of Old Chang Kee closed 1 cent higher at 84 cents.