Supermarket operator Dairy Farm International reported on Thursday its 2018 net profit dropped 77 percent to US$92 million (S$124.27 million) after a US$453 million restructuring charge for the food business in Southeast Asia.
“Following the completion of a detailed strategic review, which concluded that Southeast Asia Food was not viable in its current form, impairments have been made against the goodwill and assets associated with the Giant business and the leases of the underperforming stores have been provided for as part of the business restructuring charge,” Dairy Farm said.
Underlying net profit, which measures ongoing business performance, rose 5 percent on-year for the full year to US$424 million, it said in a filing to SGX after the market close on Thursday.
“Increased contributions from Health and Beauty, and Convenience stores, offset disappointing results from the Supermarket and Hypermarket business, while IKEA was slightly ahead,” it said.
Total sales including associates and joint ventures rose 1 percent on-year to US$21.96 billion for the year, it said.
In the outlook, Dairy Farm pointed to “significant challenges” in the short term as it reshapes the food business, but added that the other businesses were performing well.
“2018 was a pivotal year for the Dairy Farm Group with the completion of the strategic review and the development of a multi-year transformation plan to reshape the business,” Ben Keswik, chairman of Dairy Farm said in the statement. “These changes will make the business more agile and competitive. With a more customer-focused and market-driven strategy, we will achieve long-term sustainable growth.”