Supermarket chain Sheng Siong Group has posted a 20.8 per cent increase in second quarter net profit to S$8.5 million.

This was mainly attributable to higher revenue and better gross profit margin.

Revenue for the three months ended June 30 rose by 8.7 per cent to $159.8 million, largely because of the increased contribution from new stores of $20.1 million.

This was partially offset by a contraction in comparable same store sales of $7.3 million.

Earnings per share firmed by 19.6 per cent to 0.61 cent while net asset value per share slipped to 10.59 cents compared to 10.96 as at Dec 31.

An interim dividend of 1.2 cents a share was recommended, up from one cent in the same period last year.

Looking ahead, Sheng Siong noted that competition in the supermarket industry is likely to remain keen, in the light of tepid economic conditions.

Manpower costs are also expected to rise, as the supermarket industry is facing higher labour costs in the form of foreign worker levies.

"Furthermore, there are market pressures relating to wage adjustment for low-wage staff," it added.

There is also the possibility of food inflation, as food prices are susceptible to sudden disruption in supply caused by weather, diseases or other unforeseen events.

"As customers become more cost-conscious in anticipation of higher interest rates and inflationary expectations, this may affect the group's ability to pass on input cost increases in full to customers."