Sakae Sushi owner sees 43.5% fall in Q4 profit amid Covid-19 restrictions

Sakae has recommended a final dividend of 1.2 cents per ordinary share for FY2021.
Sakae has recommended a final dividend of 1.2 cents per ordinary share for FY2021.ST PHOTO: DESMOND WEE

SINGAPORE (THE BUSINESS TIMES) - Sakae Holdings, best known for its Sakae Sushi restaurant chain, posted a net profit of $1.5 million for its fourth fiscal quarter ended June, down 43.5 per cent from $2.6 million in the same quarter last year.

The decline in earnings was mainly due to a 23 per cent year-on-year fall in revenue to $4.3 million amid the Covid-19 restrictions that were implemented across Singapore and Malaysia.

Cost of sales for the quarter was down 45.2 per cent to $1.8 million. As a result, gross profit was up 8.4 per cent to $2.5 million.

Sakae has recommended a final dividend of 1.2 cents per ordinary share for FY2021, versus no dividend last year. The dividend is subject to shareholder approval at the forthcoming annual general meeting, and the payout date will be determined at a later date.

The group noted that Singapore had imposed heightened Covid-19 measures from May 4 to June 13. Under these measures, dining in was not permitted.

Meanwhile, Malaysia had also imposed a partial lockdown with limited dine-in capacity from June 2020 to May 2021. The country had also implemented another full lockdown from May 12 this year, which banned dine-in services altogether and only allowed take-out and delivery services to continue.

As a result, Sakae's revenue had taken a hit from reduced restaurant operations. However, the company said it had taken steps to pivot towards online orders and deliveries. Higher contributions from online orders and delivery sales had helped to cushion the adverse impact of lower restaurant operations.

Some store leases were not renewed when they expired, said the company, which led to a reduced number of physical stores and lower revenue.

For the full year, Sakae swung back into the black with a net profit of $2.3 million versus a loss of $0.6 million in FY2020. Revenue for the full year, however, was down 32.6 per cent to $21.1 million due to the virus restrictions.

Earnings per share (EPS) for the quarter came in at 1.06 cents, down from 1.88 cents in the year-ago period. On a full-year basis, EPS stood at 1.66 cents, reversing from a loss per share of 0.43 cent in FY2020.

Looking ahead, Sakae said the Covid-19 pandemic has brought about a "highly uncertain economic climate", and the evolution of the virus as well as the fluctuating infection rates do not bode well for F&B players.

However, as the virus moves towards a more endemic nature in Singapore, there is some optimism that consumer demand and market sentiment will improve as vaccination rates increase and a differentiated approach is taken for social gatherings and dining in.

In Malaysia, however, Sakae said the business outlook continues to be less optimistic as the country continues its battle to contain the infection rate. The company said it is not ruling out changes in government measures that evolve with the pandemic, and warned that movement restrictions and associated uncertainties on business operations will have a significant impact on its operations.

"The group will continue to recalibrate its business strategy and direction by building on its online sales channels and efforts to digitalise its business while exploring new market opportunities, and will also continue to manage business costs cautiously through optimising operational efficiency," said the company.

Shares of Sakae closed flat at 13.2 cents on Friday.