Sheng Siong Q2 profit jumps 23.1% amid intensifying competition

SUPERMARKET chain Sheng Siong Group on Thursday announced that its net profit for the second quarter ended June 30 jumped 23.1 per cent to S$13.6 million, up from S$11.1 million in the year ago period.

The group's gross margin has improved steadily over the past few quarters, mainly from the reduction in input costs arising from better buying prices and efficiency gains derived from the central distribution centre at Mandai.

The improvement of sales mix in favour of fresh produce was another contributing factor, Sheng Siong said in a statement.

Revenue on the other hand gained 4.3 per cent to S$179 million, up from S$171.6 million, of which 4 per cent was contributed by the inclusion of five new stores since the year ago period, and 0.3 per cent by comparable same store sales from the old stores.

Sheng Siong acknowledges that competition in the supermarket industry has intensified lately with more promotions - some made in conjunction with SG50. "Demand remains tepid and this is likely to persist so long as the local economic conditions continue to remain lacklustre," the group said.

The group also plans to renovate one of its older stores situated in a mature housing estate in the second half of FY2015, as it has seen declining sales.

Meanwhile, a Sheng Siong store at Loyang Point will be closed in the second quarter of 2016, as the Housing and Development Board is renovating the complex. The store is expected to re-open in the second quarter of 2017 when renovation is completed, with a larger area of approximately 8,000 square feet.

Sheng Siong's CEO Lim Hock Chee said in a statement: "We remain committed to our store expansion plans, particularly in locations where we do not have a presence, so as to reach out to our customers. At the same time, we will continue to nurture the growth of both our new and old stores, improve the sales mix and work towards reducing input costs by capitalising on our Mandai distribution centre."

For the quarter ended June, earnings per share was 91 Singapore cents while net asset value was 16.06 cents. A dividend of 1.75 cent per share was declared for the quarter.

Before results were announced, the counter closed down 1.14 per cent, or one cent, at 86.5 Singapore cents.