Singapore Kitchen Equipment swings to 1H21 net profit on Covid recovery

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Singapore Kitchen Equipment reported Sunday its first half swung to a net profit of S$475,000 from a year-earlier loss of S$1.11 million as sales and the gross profit margin increased on a gradual recovery toward the pre-Covid situation.

“During the first half of 2020, Singapore was under prolonged lockdown, which had impacted the food and beverage (F&B) industry significantly and thus comparatively for the two corresponding periods, the first half-year of 2021 reported an increase in sales resulting from the low base effect. After opening up, our growth in sales has mirrored the recovery of the industry,” Singapore Kitchen Equipment said in the statement.

Revenue for the six months ended 30 June increased 52.49 percent on-year to S$12.69 million on improvement across the three business segments — fabrication and distribution, maintenance and servicing and rental income, the company said in a filing to SGX.

The gross profit margin jumped to 33.02 percent in the first half from 23.68 percent in the year-ago period, the company said.

The fabrication and distribution business posted revenue rose 69.94 percent on-year in the first half to S$9.67 million, making it the largest contributor to overall revenue.

The maintenance and servicing business reported revenue increased 15.45 percent on-year in the first half to S$2.93 million.

The rental income business posted first half revenue grew to S$130,000 from S$100,000 in the year-ago period.

Administrative and other expenses climbed 22.16 percent to S$2.37 million in the first half, mainly due to increased professional fees over eight payment transactions totalling S$1.395 million, the company said. Previously, the company has noted the payments were made without board approval and required engaging legal, consultancy and audit professionals.

In its outlook, Singapore Kitchen Equipment said it would increase its sales efforts, but pointed to multiple factors which can affect its performance, including dependence on the F&B and hospitality industries, the ability to secure new projects, competition, supply-chain disruptions, critical worker shortages and weak spending amid a prolonged pandemic.

“The group will ride on any recovery in the F&B and hospitality services industries as Singapore transits to the endemic stage of the current Covid-19 pandemic,” the company said.

In its statement, the company noted its auditor had issued a disclaimer opinion on its financial statements for 2020, and the audit committee was of the view the group’s internal controls may not be adequate, with the information technology and risk-management systems under review.

Singapore Kitchen Equipment has appointed Baker Tilly Consultancy (Singapore) as special internal auditor to review and enhance its operating procedures.