Sushi player Sakae swings to fiscal 3Q net loss amid impairment losses

Sakae Sushi outlet in Johor Bahru, Malaysia; taken September 2018.Sakae Sushi outlet in Johor Bahru, Malaysia; taken September 2018.

Sushi restaurateur Sakae Holdings swung to a fiscal third quarter net loss of S$6.08 million, from a year-ago net profit of S$306,000, amid impairment losses, the company said Wednesday.

Revenue for the quarter ended 31 March fell 0.8 percent on-year to S$12.24 million on “steamlining” of outlets and slow sales in overseas markets, Sakae said in a filing to SGX after the market close.

But it added that its gross profit margin was around 62.1 percent, despite rising prices for raw materials, on effective management of their use.

Cost of sales increased 27.3 percent on-year to S$4.64 million for the quarter, the filing said.

Administrative expenses fell 8.3 percent on-year to S$5.34 million on streamlining of operations, Sakae said, adding labor costs also fell by 2.2 percent.

Other operating expenses nearly tripled to S$9.32 million for the quarter, from S$3.21 million in the year-ago period, mainly on a goodwill impairment of S$3.2 million and an impairment loss on other receivables of S$2.8 million, Sakae said.

The goodwill impairment was on the company’s 51 percent stake in a Chile-based frozen seafood production company Cocosa Export, it said.

“The group has assessed the business performance and future prospects of Cocosa Export, and is of the view that the value of the investment, in longer term, may not be recoverable,” Sakae said.

It didn’t break out an explanation of the other receivables.

Sakae issued a cautious outlook.

“Due to intense competition within the food and beverage industry, in addition to acute labor shortages, the group expects operating conditions to be challenging as food, labor, rental and utilities costs continue to rise in the foreseeable next 12 months,” Sakae said. “The group continues to work hard to manage the challenging operating conditions.”

 

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