SINGAPORE (Feb 23): Supermarket chain Sheng Siong Group posted a 10.3% increase in earnings to $62.7 million for the full year ended Dec 31, from $56.8 million a year ago.
This was mainly due to higher revenue, improved gross profit margins, and higher other income, partially offset by higher operating expenses.
Full year revenue grew 4.2% to $796.7 million, from $764.4 million a year ago.
This was mainly due to contribution from new stores, but offset by lower revenue arising from the temporary closure of its Loyang store.
“Comparable same store sales were affected by the tepid demand caused by the prevailing weak economic conditions,” Sheng Siong says in an SGX filing on Thursday.
Gross profit margin grew by 1.0-percentage-point to 25.7%, mainly attributed to lower input prices resulting from higher rebates from suppliers in the year. These rebates were given for special promotions, volume, display and bulk handling services.
Administrative expenses increased by 5.9% to $132.7 million, mainly due to increased staff to operate the new stores, as well as a higher bonus provision as a result of better financial performance in FY2016.
Cash and cash equivalents stood at $63.5 million as at Dec 31, 2016.
The group has proposed a final dividend of 1.85 cents per share, bringing the total dividend to 3.75 cents per share, or equivalent to a payout ratio of around 89.9% for FY2016.
Looking ahead, Sheng Siong says it anticipates continuing lacklustre demand as retail sales, which has been generally weak in FY2016, is not expected to improve spectacularly.
“Competition in the supermarket industry is expected to remain keen as consumers are expected to be more cost conscious,” the group adds.
Sheng Siong adds that while it will continue to look for suitable retail space, particularly in areas where it does not currently have a presence, it will “remain prudent” in bidding for shops.
“We are delighted to remain on track for our store expansion plans with the opening of four new stores in FY2016,” says Sheng Siong’s Group CEO Lim Hock Chee.
“To further enhance our operating margin, we will focus on increasing direct and bulk purchasing, driving for a high mix of fresh produce, increasing the range of house brand products as well as reducing overheads as a percentage of revenue,” Lim adds.
Sheng Siong closed half a cent higher at 95.5 cents on Thursday.
