BreadTalk reports 1Q19 net profit rose nearly 12 percent on expansion into new markets

BreadTalk outlet in Singapore; taken September 2018.BreadTalk outlet in Singapore; taken September 2018.

Iconic Singapore bun maker BreadTalk reported Monday its first quarter net profit rose 11.5 percent on-year to S$1.3 million on the company’s expansion into new markets.

Revenue for the quarter ended 31 March increased 6.1 percent on-year to S$157.6 million amid overall efficiencies in central kitchen and procurement efforts, BreadTalk said in a filing to SGX after the market close.

“2018 was a year of milestones for us. We expanded into new markets such as London with Din Tai Fung and brought our joint-venture partners Song Fa Holdings and Wu Pao Chun Food Ltd into strategic markets such as China and Singapore respectively,” Henry Chu, group CEO, said in the statement.

“With the new partnerships, we laid the foundations to diversify our business portfolio so as to achieve sustainable growth for the group,” he added, saying the revenue increase was a sign the efforts were paying off.

Overall interest expense for the quarter increased 136.2 percent on-year to S$5.9 million on changes to accounting for leases, BreadTalk said.

In addition, BreadTalk said it disposed of its entire stake in money-losing Carl Karcher Enterprises (Cayman), bringing down its share of losses of associates by 81.9 percent to S$50,000.

Bakery turnaround efforts

In the bakery division, revenue increased 2.3 percent on-year to S$72.0 million for the quarter, while earnings before interest, tax, depreciation and amortization (EBITDA) jumped to S$14.4 million from S$3.8 million in the year-ago quarter, BreadTalk said.

The increase was due to the consolidation of revenue from the Thailand Bakery business after BreadTalk acquired a 50 percent interest in BTM (Thailand) from Minor Food Group, the filing said. The direct-operated Singapore stores also saw stronger revenue growth, it said.

“Efforts to turnaround of the bakery business have intensified and we have seen some positive outcomes,” BreadTalk said.

Food atrium sales ‘generally strong’

The food atrium division revenue increased 3.1 percent on-year to S$38.6 million for the first quarter, while EBITDA jumped to S$20.2 million from S$5.3 million in the year-ago quarter, the filing said.

“Same store sales growth remained generally strong across the entire portfolio with North China, East China and Hong Kong providing the main thrust. Stall vacancy remains low,” BreadTalk said.

“We expect to see our Food Atrium business deepen its penetration in existing and new markets like mainland China, Hong Kong, Taiwan and
Cambodia,” it added.

Din Tai Fung contributions

In the restaurant division, revenue rose 9.8 percent on-year to S$40.5 milion in the quarter, while EBITDA increased to S$10.5 million from S$8.7 million in the year-ago period, BreadTalk said.

“The first quarter of 2019 also saw the full quarter revenue contribution by our first Din Tai Fung outlet in London as well as the Central Plaza Pinklao outlet in Bangkok, both of which were opened in December 2018,” the company said.

“Same store sale growth for the Singapore operations came in at a high single digit percentage, signifying the underlying strength of the Din Tai Fung brand amongst consumers,” it added.

BreadTalk said it plans to open a second Din Tai Fung restaurant in London, and that it has a new outlet pipeline in Singapore and Thailand.

In the 4orth division, revenue doubled to S$5.5 million from S$2.7 million in the year-ago quarter, but the segment posted an EBITDA loss of S$500,000, mainly on start-up costs for new outlets, the filing said.

During the quarter, the 4orth division started Song Fa Bak Kut Teh operations in Beijing, China and Bangkok, the filing said.


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