Sushi restaurateur Sakae posts fiscal year net loss on impairment charges on Cocosa Export

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

Sakae Holdings posted Thursday a net loss of S$13.40 million for its fiscal year after taking impairment losses related to its 2016 acquisition of Cocosa Export; that compared with a net profit of S$5.0 million for the 18 month period ended 30 June 2018.

The sushi restaurateur changed its fiscal year end, resulting in an 18-month comparison period.

Revenue for the fiscal year ended 30 June was S$44.42 million, compared with S$94.15 million for the 18-month comparison period, Sakae said in a filing to SGX.

The decline in revenue was due to streamlining operations, which also led to declines in sales and labor costs, the filing said. Streamlining caused administrative expenses to drop to S$21.4 million, down 47.7 percent from S$40.9 million in the 18-month comparison period, Sakae said.

Labor costs were S$16.5 million in the fiscal year, down 46.9 percent from S$31.1 million in the 18-month comparison period, the filing said.

“Despite the rising prices of the high quality raw materials used, the group has effectively managed the use of the raw materials for its restaurant business and maintained its gross profit margin at about 62.8 percent,” Sakae said.

Impairments

The company posted a goodwill impairment of S$3.2 million and an impairment loss on other receivables of S$2.8 million.

The impairments were on Sakae’s 51 percent stake in Chile-based frozen seafood production and trading company Cocosa Export, acquired in 2016, the filing 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. “Despite the allowance for impairment loss on other receivables, the company will continue to work on its recovery.”

Outlook

Sakae issued a cautious outlook.

“Due to intense competition within the food & 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. The group continues to work hard to manage the challenging operating conditions,” the filing said.

“The group will continue its efforts to develop new and interesting products offerings, and connecting closely with our customers through social media and other various marketing platforms,” it added.

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