Curry puff maker Old Chang Kee posts fiscal 1H net profit tumbled as catering to dorm workers ended

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

Iconic Singapore curry puff maker Old Chang Kee reported Thursday its net profit for the fiscal first half tumbled 42.7 percent on-year to S$3.44 million as the gross profit margin fell, mainly on the absence of economies of scale savings from the large-scale catering of packed meals to foreign workers dormitories.

Revenue for the April-to-September period edged up 0.9 percent on-year to S$38.52 million, mainly on higher delivery and retail sales, partially offset by a decrease in catering sales, the company said in a filing to SGX.

“The impact of Covid-19 on businesses in general has been unprecedented. While our retail revenue continues to show improvements and remains fairly resilient for the six months ended 30 September 2021 thus far, significant uncertainty still hangs over the entire retail sector both in Singapore and overseas,” Old Chang Kee said in the filing.

“Our retail revenues remain below pre-Covid-19 levels as at to date, due to various social distancing measures put in place, resulting in operational losses for some of our retail outlets,” the company said. “The group has sought new revenue streams including meal kit home
deliveries and increased the range of snack deliveries and bento meals for our stay-at-home customers.”

Retail outlets reported revenue rose by S$7.8 million, or around 28.4 percent on-year, mainly on revenue from new outlets and increased revenue from existing outlets, partly offset by the loss of revenue from closed outlets.

Old Chang Kee noted the year-ago period was affected by social-distancing measures during the Phase 1 circuit breaker period to stem the spread of Covid-19.

Revenue from other services, including delivery and catering, fell by around S$7.4 million, mainly on the lack of packed meals catering for the worker dormitories partly offset by higher delivery revenue, the filing said.

Selling and distribution expenses increased 19 percent on-year to S$17.32 million, mainly on higher staff costs to support the increased retail revenue from outlets, lower rental rebates from landlords and the absence of the year-earlier waiver of foreign worker levies, Old Chang Kee said.

Old Chang Kee declared a dividend of 1 Singapore cent a share, up from 0.50 Singapore cent a share in the year-ago period.

The curry puff maker issued a cautionary outlook.

“With the re-opening of the economies, the group noted that inflationary pressures have increased, in particular, raw material and labour costs, while rental costs remain elevated,” Old Chang Kee said.

“The group will continue with our efforts to reduce operating costs, improve operational efficiencies and seek more nonretail revenue streams, including beefing up our e-commerce presence and working with major e-commerce players during this challenging period,” it added. “Provided that the health crisis does not deteriorate materially resulting in the complete closure of all our retail outlets for an extended period, the board believes that the group’s cash balance is sufficient to buffer against the impact of Covid-19 for at least the next 12 months.”