Duty Free International fiscal 2Q loss narrows despite closure of retail outlets

Malaysia ringgit notesMalaysia ringgit notes

Duty Free International reported Wednesday its fiscal second quarter net loss narrowed to 5.65 million ringgit, from a loss of 10.79 million ringgit in the year ago period, mainly on lower rental of premises, lower employee benefits costs and a lower net foreign exchange loss.

Revenue for the three months ended 31 August plummeted 80 percent on-year to 12.14 million ringgit, the retailer said in a filing to SGX.

“The decrease was mainly due to the non-operations of all of the group’s retail outlets in Malaysia in the current quarter under review following the imposition of nationwide Full Movement Control Order (FMCO) by Malaysia Government which took effect from 1 June 2021 due to the significant increase of positive Covid-19 cases in the country,” Duty Free International said.

“In the previous year corresponding quarter, certain outlets in the group that were not at the Malaysia-Thai border and the airports were opened and were operating,” the company noted.

Employee benefits expenses dropped 65 percent on-year to 2.89 million ringgit in the fiscal second quarter, the company said.

“The savings were mainly from the cost cutting measures undertaken by the group in the reduction of human resource costs, which included downsizing of manpower in 2Q FY2021 and salary reduction of all employees across the group,” Duty Free International said.

Rental of premises expenses posted a gain of 58,000 ringgit for the quarter, compared with an expense of 4.19 million ringgit in the year-ago quarter, the filing said. The reduction was mainly on rental reductions from landlords as well as the permanent closure of certain retail outlets, the company said.

For the fiscal first half, Duty Free reported its net loss narrowed to 5.40 million ringgit from a net loss of 15.95 million ringgit in the year-ago period. Revenue for the fiscal first half fell 56.2 percent on-year to 45.59 million ringgit, the filing said.

Outlook

In its outlook, Duty Free International was cautious, even as the majority of states in Peninsular Malaysia are in the process of reopening and easing movement controls.

“The international borders have remained closed and hence, the group’s retail outlets at the Malaysia-Thailand border and airport outlets are still closed for the time being. Even though Malaysia gradually eases into economy recovery mode with the encouraging progress of the vaccination programme, re-opening of more hospitality and tourism sectors as well as relaxation of local travelling for fully vaccinated individuals, it is still unknown when the international borders are allowed to be opened,” the company said.

“The group expects the business environment to remain challenging for the rest of the financial year ending 28 February 2022,” it added.