Dairy Farm reports higher sales, marginal drop in underlying profit

SINGAPORE - Dairy Farm International, which owns supermarket chains like Giant and Cold Storage, said its underlying net profit in the first half year fell by 2 per cent to US$224 million.

Sales for the six months ended June 30 rose by 4 per cent to US$5.3 billion.

Dairy Farm said it achieved like-for-like sales growth in most of its major markets, with all divisions reporting higher sales in the first half year.

The health and beauty, home furnishings and restaurants divisions each achieved further growth in sales and profits.

Profits of the food division, however, were lower due to challenging market conditions in Southeast Asia and increased costs.

Less favourable exchange rates also affected the group's results on translation into US dollars.

The food businesses focused on maintaining sales growth in more competitive market conditions and an environment of escalating costs, which has had an impact on margins and led to a decline in profits.

The Hong Kong banners had a satisfactory first six months. In Malaysia, both sales and profits were above the prior year.

Singapore and Indonesia, however, each recorded lower profits.

In Singapore, a challenging trading environment and construction activity impacting several key stores caused the profit decline.

Giant and Hero stores in Indonesia achieved sales growth from new store development, but profits were depressed by higher costs, and the contribution to the group results suffered further from the weaker rupiah exchange rate.

In the health and beauty business, The Guardian businesses in Singapore, Malaysia and Indonesia produced lower profits in the face of more challenging trading conditions.

The Ikea businesses in Hong Kong and Taiwan traded well, with the recently opened Tai Chung store in Taiwan continuing to perform strongly.

Restaurant associate, Maxim's, has maintained its consistent performance with improved sales and profits in Hong Kong and mainland China.

The board maintained an unchanged interim dividend of 6.5 US cents a share.

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