Supermarket operator Sheng Siong reported its fourth quarter net profit increased 4.6 percent on-year to S$17.5 million despite slower sales as new stores boosted revenue.
Revenue for the quarter ended 31 December rose 10.7 percent on-year to S$221.8 million, it said in a filing to SGX after the market close on Monday.
New stores contributed 14.7 percent of revenue for the quarter, while comparable same-store sales for the quarter fell 2.7 percent, Sheng Siong said.
CEO Lim Hock Chee pointed to the 10 new stores opened during the past year, bringing the total to 54.
“Going ahead, we remain on the lookout for new retail opportunities, especially in areas where we do not have a presence,” he said in the statement. “Besides nurturing the growth of our new stores in Singapore and China, we will continue with our efforts in enhancing the gross margin via more efficiency gains in the supply chain and higher sales mix of fresh produce.”
For the full year, net profit rose 1.4 percent to S$70.5 million on revenue of S$890.9 million, up 7.4 percent on-year, Sheng Siong said.
It said the new supermarket in Kunming, China, which opened in November 2017, posted a S$700,000 loss for the full year, while a second China supermarket, also in Kunming, was expected to be operational in the third quarter of the year.
It proposed a final dividend of 1.75 Singapore cents, unchanged from a year earlier, bringing the total dividend for the year to 3.40 Singapore cents.
In its outlook, Sheng Siong noted that Singapore’s economy was expected to slow ahead.
“Retail sales, in particular sales at supermarkets have deteriorated in the second half of FY 2018,” Sheng Siong said in the statement. “Competition in the supermarket industry is expected to remain keen among the traditional brick and mortar, exacerbated by the proliferation of new supermarkets in HDB residential areas, as well as the push by new and existing e-commerce players for market share.”
HDB stands for Housing and Development Board, which oversees Singapore’s public-housing system.
It added it would continue to look for retail spaces, especially in public housing estates where there is no supermarket presence, and it noted that six HDB shops won by competitors in competitive bidding in 2017 and 2018 are now vacant and available for re-tender.