Disappointing 2017 results for Dairy Farm

Retail group Dairy Farm International Holdings put up a "disappointing" performance for last year, largely due to a poor showing by its supermarkets and hypermarkets.

Net profit came in at US$403.5 million (S$530.3 million) for the 12 months to Dec 31, down from US$469 million the year before.

Earnings per share were down to 29.82 US cents, from 34.68 US cents. Dairy Farm said "positive performances in most of the group's formats and key associates were offset by weakness in the supermarket and hypermarket businesses, largely in South-east Asia".

A series of loss-making stores in Indonesia, Singapore and Malaysia were closed in the fourth quarter, and a major clearance exercise was undertaken across South-east Asia to liquidate excess old stock, predominantly in general merchandise. This resulted in US$64 million in business change costs, which hurt overall profits.

Revenue was up 1 per cent year on year to US$11.3 billion while combined total sales, which include 100 per cent of its associates and joint ventures, were up 7 per cent to US$21.8 billion.

This was thanks to strong growth from its Shanghai-listed hypermarket and supermarket unit Yonghui Superstores and its Hong Kong Maxim's outlets. Chairman Ben Keswick said: "After a disappointing year in 2017 for our food businesses in South-east Asia, actions are being taken to improve their long-term performance.

"A strategic review is under way to determine the actions necessary to re-establish the competitive positions of these businesses and turn around their financial performance."


    REVENUE: US$11.3 billion (+1%)

    NET PROFIT: US$403.5 million (-14%)

    FINAL DIVIDEND PER SHARE: 14.5 US cents (unchanged)

Group chief executive Ian McLeod added: "In general, we have not responded fast enough to new competition and changing consumer preferences across many of our markets, and need to improve the shopping experience for our customers, as well as address gaps in our range and become more price competitive."

He noted that Cold Storage in Singapore undertook a detailed range review during the year, and that "early signs are that this is resonating with customers and work is continuing to drive improvements".

Mr McLeod said Dairy Farm will focus on "growing our major markets, improving profitability in our South-east Asia food business, identifying further growth opportunities and improving our digital capability".

It has recommended a final dividend of 14.5 US cents per share, giving a total dividend of 21 US cents per share for the year.

Dairy Farm shares closed 5 US cents up at US$8.22.

A version of this article appeared in the print edition of The Straits Times on March 09, 2018, with the headline 'Disappointing 2017 results for Dairy Farm'. Subscribe