2. Bedok North 115: BLK 115 Bedok North Road #01-319 Singapore 460115
3. Bedok North 539A: BLK 539A Bedok North St 3 #01-477 Singapore 461539
4. Chin Swee 52: BLK 52 Chin Swee Rd #01-25 Singapore 160052
5. Clementi 352: BLK 352 Clementi Ave 2 #01-91/99 Singapore 120352
6. Clementi 720: BLK 720 Clementi West St 2 #01-144 Singapore 120720
7. Elias Mall Market Stalls: Stall nos. 14, 15, 16 BLK 623 Elias Road #B1-01 Elias Mall Singapore 510623
8. Jurong SuperBowl: 3 Yuan Ching Rd #01-01A/02 Singapore 618642
9. Teban Gardens: BLK 61 Teban Gardens Rd #01-21 Singapore 600061
10. Woodlands 6A: BLK 6A Woodlands Centre Rd #01-280 Singapore 731006This brings the total number of Sheng Siong outlets operating 24 hours to 25.
Singapore, 23 July 2013 – Sheng Siong Group Ltd. (“Sheng Siong”, together with its subsidiaries, the “Group” or “昇菘集团”), one of the largest supermarket chains in Singapore, registered a 20.8% year-on-year (“yoy”) increase in net profit to S$8.5 million for the second quarter ended 30 June 2013 (“2Q2013”). This was mainly attributable to higher revenue and better gross profit margin.
Revenue increased 8.7% yoy to S$159.8 million for 2Q2013, largely because of the increased contribution from new stores of S$20.1 million. This was partially offset by a contraction in comparable same store sales of S$7.3 million. Competitors’ activities, declining sales in the Group’s old stores in matured HDB estates and building and renovation works affecting certain stores were the main reasons for the lower comparable same store sales. The Group’s Bedok Central and The Verge stores suffered from ongoing construction works in the vicinity; while one of the stores at Ang Mo Kio was closed for about a month for major renovation. Comparable same store sales declined by 1.8%, excluding the impact of stores affected by building and renovation works.
2Q2013 gross profit margin of 23.2% was 0.7 percentage points (“p.p”) higher than that of 1Q2013, mainly because of stable selling prices, improved sales mix and cost efficiencies derived from the Mandai Distribution Centre. While 2Q2013 gross margin increased by 1.3 p.p from 21.9% in 2Q2012, this may not be strictly comparable because gross margins in 2Q2012 were still recovering from the effects of the price war which started in the fourth quarter of 2011.
In 2Q2013, administrative expenses increased by S$2.5 million yoy to S$26.3 million, as a result of additional headcount and higher store count relating to the expansion of supermarket operations. Notwithstanding the start-up of 8 new stores in 2012 and cost pressures, the Group maintained administrative expenses at 16.5% of revenues for 2Q2013, representing only a 0.3 p.p increase from 2Q2012.
In 2Q2012, cash flow generated from operating activities amounted to S$21.0 million, with a significant part of the cash inflow coming from adjusted profit of S$12.6 million and changes in working capital of S$11.1 million. Cash flow used in investing activities was S$2.2 million mainly due to the payment for property, plant and equipment for the stores as well as the distribution centre. With the distribution of the FY2012 final dividend amounting to S$24.2 million or 1.75 cents per share, cash and cash equivalents decreased by S$5.5 million. As a sign of financial strength, the Group’s balance sheet remained strong with net cash of S$117.6 million as at 30 June 2013.
Competition in the supermarket industry is likely to remain keen, in the light of tepid economic conditions. One of the Group’s competitors had re-branded their chain of supermarkets. Competition for retail space has not abated and securing new retail outlets could be challenging going forward.
The Group expects to see upward pressure on manpower costs. Similar to other industries, the supermarket industry will face higher labour costs in the form of foreign worker levies. Furthermore, there are market pressures relating to wage adjustment for low-wage staff. Food inflation may also increase input costs, as food prices are susceptible to sudden disruption in supply caused by weather, diseases or other unforeseen events. As customers become more cost-conscious in anticipation of higher interest rates and inflationary expectations, this may affect the Group’s ability to pass on input cost increases in full to customers.
The Group may be earmarking some of the old stores in matured housing estates for major re-fitting, in view of declining same store sales. This could result in a month or so of lost sales for each of the affected stores.
To overcome the challenges in the business environment such as increasing inflationary pressures and foreign labour restrictions, the Group remains focused on increasing its retail presence as well as enhancing its product sales mix and improving on its processes to achieve cost savings.
To reward shareholders for their continued support, we are pleased to declare an interim cash dividend of 1.2 cent per share. We remain committed to distribute up to 90% of our net profit for FY2013 and FY2014.”
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