BreadTalk 2018 net profit drops 30 percent on one-off gain, Bakery decline

BreadTalk and Toast Box outlets at Singapore’s VivoCity mall; taken September 2018.BreadTalk and Toast Box outlets at Singapore’s VivoCity mall; taken September 2018.

Singapore bun maker BreadTalk reported on Tuesday its 2018 net profit dropped 29.9 percent on-year to S$15.2 million on a year-earlier one-off gain and a decline in the Bakery division, partially offset by growth from the Food Atrium and Restaurant divisions.

The year-ago gain was a S$9.3 million net capital gain from divesting its TripleOne Somerset investment, it said in a fling to SGX after the market close on Tuesday.

Revenue for the full year rose 1.7 percent on-year to S$609.80 million, BreadTalk said.

Interest expense for the year increased 69.9 percent to S$9.21 million on higher total debt after the company issued S$100 million five-year 4.00 percent medium-term notes in January, the filing said.

Bakery revenue falls

The Bakery division’s revenue fell 5.1 percent on-year to S$282.0 million on lower revenue from direct-operated stores in Shanghai, Beijing and Hong Kong and lower franchise revenue in China, partially offset by stronger revenue from direct-operated stores in Singapore and higher international franchise revenue, it said.

The number of direct-operated outlets fell to 221 in 2018 from 240 a year earlier, while the franchise outlet count increased to 642 from 631, BreadTalk said.

“The management team is mindful of the significant headwinds that we faced during the year at our Bakery business,” BreadTalk said. “Starting FY2019, we have taken a more aggressive stance to turnaround the business and it will be all hands on deck, with the group CEO personally leading the efforts.”

It added that centralized procurement efforts were delivering costs savings, while it was putting more effort into R&D to create a stronger product pipeline.

The Bakery division also re-entered the Indian and Chongqing, China, markets with new franchise partners and brought the Toast Box brand to Indonesia with a local partner, it said.

The Food Atrium division revenue increased 5.1 percent on-year to S$156.9 million in 2018, when it opened one food atrium in Shenzhen, one in Hong Kong and one in Cambodia, while closing its only outlet in Hangzhou, it said.

Restaurant division revenue increased 8.2 percent on-year in 2018, with the addition of four outlets: one in Singapore, two in Thailand and one Din Tai Fung restaurant in the U.K., it said.

The 4orth division reported revenue of S$14.2 million for the year, BreadTalk said, noting that includes five So Ramen, one TaiGai and one Nayuki outlets in Singapore, and four Song Fa Bak Kut Tech and one Wu Pao Chun Bakery outlets in China.

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