Old Chang Kee reports fiscal 2Q net profit fell 9 percent

Old Chang Kee outlet at Suntec mallOld Chang Kee outlet at Suntec mall

Iconic Singapore curry puff maker Old Chang Kee reported Thursday its fiscal second quarter income attributable to the company’s owners fell 9.4 percent on-year to S$969,000 as revenue from retail outlets declined and margins fell.

Revenue for the quarter ended 30 September fell 2.1 percent on-year to S$22.94 million, the curry puff maker said in a filing to SGX.

Retail outlets’ revenue fell 4.7 percent on-year to S$21.8 million, mainly on the absence of contributions from closed outlets and lower revenue from existing outlets, partly offset by contributions from new outlets, Old Chang Kee said.

As of end-September, Old Chang Kee operated 90 outlets in Singapore, up from 89 in the year-ago period, the filing said.

Revenue from other services, such as delivery and catering services, jumped 117 percent to S$1.1 million, mainly on higher delivery and catering revenue, the filing said.

The gross profit margin fell to 63.6 percent in the quarter from 63.8 percent in the year-ago period, mainly on higher labor costs due to annual salary adjustments, the filing said.

“Amidst the challenging retail conditions, the group will continue with its efforts to drive internal operational efficiencies, refresh its product range, and enhance its brand positioning,” Old Chang Kee said.

“On the current local operations, the group expects rental, labor and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labor market will continue to remain tight,” it added.

Selling and distribution expenses rose 3.2 percent on-year in the quarter to S$10.03 million on higher fees related to delivery, higher advertising and promotion expenses, higher packaging materials costs and changes to accounting for leases, the filing said.

Administrative expenses fell 8.4 percent on-year to S$3.09 million on lower head office staff costs due to lower bonus provision, lower legal and professional fees, lower repair and maintenance expense and lower motor vehicle expenses, Old Chang Kee said.

The share of results of a joint venture was a loss of S$69,000, narrower than the year-earlier loss of S$154,000, mainly on lower start-up and marketing expenses for the U.K. venture, the filing said.

“Fixed cost for the group’s first flagship outlet in Covent Garden – London, U.K. remain high. The group is scheduled to open a second Old Chang Kee outlet in Goodge Street, London in December 2019, and is on the lookout to open more retail outlets in Central London, which will help to improve brand visibility and to achieve economies of scale,” the curry puff maker said.

Old Chang Kee declared a dividend of 1.0 Singapore cent a share, down from 1.5 Singapore cents a share in the year-ago period.

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