‘Solid’ profit growth for Dairy Farm International

Dairy Farm International Holdings had solid profit growth in the first half despite lower sales in its supermarkets and hypermarkets, says chairman Ben Keswick.

“While the rest of the year is expected to stay challenging for supermarket and hypermarket activities in Southeast Asia, the group’s other businesses continue to make steady progress.”

Overall profits increased with strong results from Maxim’s and Yonghui as well as good performances from the health-and-beauty and home-furnishings divisions, more than compensating for the lower earnings in the food division.

Sales for the period by the group’s subsidiaries of US$5.5 billion were marginally behind last Year’s first half, but flat at constant exchange rates. Total sales, including associates and joint ventures, were 3 per cent higher at $10.4 billion. The underlying net profit was $211 million, up 6 per cent.

Supermarket and hypermarket sales declined 3 per cent lower at constant exchange rates, and profits fell because of continuing softness in some key markets. Trading continued steadily in Hong Kong, but difficult trading conditions in Malaysia, Singapore and Taiwan resulted in lower sales and profits.

In Indonesia, better margin management enabled profits to be maintained despite lower sales, while profitability improved in the Philippines even though sales were flat following the closure of a hypermarket.

Yonghui had 15 per cent growth in revenue and a 57 per cent jump in profit, thanks to higher store numbers and margin improvement from more effective merchandising.

China underpins growth

Dairy Farm’s convenience stores performed well. Hong Kong and Macau were ahead of last year, supported in part by a modest increase in tourist numbers. In Singapore, sales were lower as some stores were closed, although earnings benefited as several had not been profitable. Store expansion in Mainland China continued to underpin sales growth.