Sheng Siong rings up profit increase in Q1

Sheng Siong's floor space in Singapore was down 4.6 per cent to 436,000 sq ft, in spite of four new stores opening. The group now has 48 supermarkets here. The firm added that it will keep looking for retail space and will continue to bid "in a ratio
Sheng Siong's floor space in Singapore was down 4.6 per cent to 436,000 sq ft, in spite of four new stores opening. The group now has 48 supermarkets here. The firm added that it will keep looking for retail space and will continue to bid "in a rational manner" for new Housing Board shops.ST FILE PHOTO

Tight competition and a smaller retail area did not stop Sheng Siong Group's cash registers ringing in the first quarter, it reported yesterday.

The supermarket operator rang up net profit of $18.25 million for the three months to March 31 - a 6.6 per cent year-on-year increase - while revenue rose by 5.1 per cent to $228.28 million.

Floor space in Singapore was down 4.6 per cent to 436,000 sq ft, in spite of four new stores opening. The group now has 48 supermarkets here, after its Verge and Woodlands Block 6A outlets shut. It opened a supermarket in China in November.

Sheng Siong has also won bids for two more stores - in Bukit Batok and Yishun - which are expected to be up and running this quarter. Research house Nomura previously said that those stores should start contributing from the second half of the year, and are expected to lift full-year earnings by 3-4 per cent.

The firm added that it will keep looking for retail space - including in public housing estates where it does not yet play - and will continue to bid "in a rational manner" for new Housing Board shops.

Still, it noted that the industry is expected to stay competitive, and potential trade wars could also upset the apple cart.

The group said in its outlook: "Besides competitive pressures, gross margin would be affected if input cost is increased because of food inflation, which could be caused by disruption to the supply chain or changes to prices caused by nations imposing trade tariffs."

  • AT A GLANCE

  • REVENUE: $228.3 million (+5.1 per cent)

  • NET PROFIT: $18.3 million (+6.6 per cent)

Chief executive Lim Hock Chee added: "In line with our gross margin enhancement initiatives, we remain committed to work towards a sales mix with a higher proportion of fresh produce and reducing the input costs by increasing direct purchasing and bulk handling."

Sheng Siong shares closed up two cents to $1.02, before the results were released.

A version of this article appeared in the print edition of The Straits Times on April 28, 2018, with the headline 'Sheng Siong rings up profit increase in Q1'. Print Edition | Subscribe