Sakae Holdings reports fiscal 4Q21 net profit fell 44 percent amid store closures

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

Sakae Holdings reported Sunday its fiscal fourth quarter net profit fell 43.5 percent on-year to S$1.48 million as the sushi restaurateur closed stores to focus on online orders and as both Singapore and Malaysia implemented lockdowns to stem the spread of the Covid-19 virus.

Revenue for the three months ended 30 June fell 23 percent on-year to S$4.27 million, Sakae said in a filing to SGX.

“Group revenue declined with the reduced restaurant operations. However, as the group had taken steps to pivot towards online orders and delivery, the negative impact of reduced restaurant operations was cushioned by revenue contribution from online orders and delivery sales,” Sakae said in the statement.

“Coupled with weaker consumer demand and sentiment, the group has adapted its operational strategy to reduce the number of physical outlets and focus more on online and delivery sales. In this regard, some store leases were not renewed when they expired, leading to a reduced number of physical stores and hence reduced group revenue,” the company added.

Cost of sales for the quarter also fell 45.2 percent on-year to S$1.78 million along with the reduced revenue, the filing said.

However, the gross profit margin continued to improve, rising to 58.3 percent in the fourth quarter from 41.4 percent in the year-ago period, Sakae said.

For the full fiscal year, Sakae reported it swung to a net profit of S$2.32 million from a year-ago loss of S$600,000, on revenue of S$21.15 million, down 32.6 percent on-year.

Sakae declared a final dividend of 1.2 Singapore cents, compared with no dividend in the year-ago period.

Cautious outlook

Sakae was cautiously optimistic on its outlook for Singapore, but had more concerns on Malaysia.

“In Singapore, from pandemic looking to move towards an endemic, there is optimism that consumer demand and market sentiment will improve as the Covid-19 vaccination rates increase and a differentiated approach taken for social gatherings and dining in. However, given the uncertain nature of the Covid-19 virus evolution, the group will continue to adopt a cautious outlook in planning its business operations,” Sakae said.

For Malaysia, the outlook is “less optimistic” as the country is still struggling to contain the infection rate, Sakae said.

“The changes in governmental measures which evolve with the pandemic situation cannot be ruled out. Movement restrictions of people together with the associated uncertainties on business operations, will have a significant impact to the group’s operations,” the company said.