Dairy Farm H1 underlying profit rises 5.4% to US$176.6m

UNDERLYING profit for supermarket and convenience store retailer Dairy Farm International rose 5.4 per cent to US$176.6 million for the half-year ended June 30, from a restated US$167.5 million a year ago. The accounts were restated due to changes in accounting policies.

The group's results were boosted by improved profit margins at Shanghai-listed hypermarket and supermarket operator Yonghui, the deconsolidation of its associate business Yunchuang, and the additional profit contribution from investment in the Robinsons Retail business in the Philippines.

Revenue dipped 3 per cent to US$5.76 billion due to deconsolidation of the Rustan Supercenters business in the final quarter of 2018 and the space optimisation plan for the Food business currently taking place in South-east Asia.

Net profit was flat at US$178 million.

Sales from the supermarkets and hypermarkets segment, including associates and joint ventures, rose 8.8 per cent to US$8.8 billion.

Convenience store operations achieved higher sales in all markets, with the strongest growth coming from the stores in China, said Dairy Farm. In the Health and Beauty division, strong sales were reported in North Asia.

Guardian in South-east Asia also recorded an improvement in sales and profit, due to better operating standards and improvements in service and product availability, said Dairy Farm. IKEA had higher sales growth in all markets, but profitability was lower because of an increased cost of goods and pre-opening expenses for new stores under development in Taiwan and Indonesia.

"Every area of Dairy Farm's subsidiary businesses is undergoing some form of business transition and this scale of change will take time to execute successfully in a sustainable way. Within South-east Asia Food, optimisation of the store portfolio is continuing which will have a positive effect on results in the second half," said Ben Keswick, chairman of the group.

Underlying earnings per share was 13.05 US cents, compared with 12.38 US cents a year ago. An interim dividend of 6.50 US cents per share has been declared, unchanged from the previous period.

The counter ended at US$7.38 on Thursday before results were released, down 1.6 per cent.