SINGAPORE - Supermarket operator Sheng Siong Group reported an 8.2 per cent increase in net profit to S$15.7 million for the third quarter, mainly because of higher revenue and improved gross margin which was partially offset by higher operating expenses and lower other income.
Revenue for the three months ended Sept 30 rose by 1.2 per cent to S$202.4 million.
Sheng Siong noted in a statement that consumer's sentiment is still cautious and sales at supermarkets remained sluggish as reported in the retail sales numbers published by the Department of Statistics, Singapore.
Comparable same store sales fell by 1.2 per cent, caused mainly by poor festive sales during the Chinese Seventh Month festival and sluggish sales in September.
Gross margin increased to 25.9 per cent from 24.3 per cent in the same period last year, largely contributed by lower input prices resulting mainly from higher rebates in the recent quarter.
These rebates were given for volume, display and for providing bulk handling services on behalf of the suppliers.
Administrative expenses increased by S$1.6 million, mainly because of higher depreciation charges, an increase in staff costs as more headcounts were needed to operate new stores and a higher bonus provision as a result of the higher operating profit.
Earnings per share rose to 1.04 cents from 0.96 cent previously. Net asset value per share dipped to 15.74 cents from 16.24 cents as at Dec 31.
Looking ahead, Sheng Sion noted that competition in the supermarket industry is expected to remain keen.
Given the uncertain economic conditions, consumers are expected to be even more cost conscious.
The group is still looking for suitable retail space particularly in areas where the group does not have a presence. However, competition for retail space, particularly for new HDB shops is expected to remain keen, which have escalated bidding prices.
Meanwhile, the completion of the construction of the mall in Kunming where the group's subsidiary has leased retail space to operate a supermarket has been delayed.
Sheng Siong has not been able to obtain a firm handover date from the landlord and envisaged that the opening of the supermarket would be delayed till the second quarter of 2017.