DFI Retail Group D01 has returned to profitability with earnings for the 1HFY2023 ended June 30 of US$8 million ($10.66 million), compared to a loss of US$58 million in the same period a year before.
This brings their earnings per share to 0.61 US cents.
The 1HFY2023 sales for the group, inclusive of 100% of associates and joint ventures, were slightly behind those of the prior year at US$13.5 billion, primarily due to reduced sales at Yonghui.
However, subsidiary sales were in line with the prior year at US$4.6 billion, reflecting revenue growth in its health & beauty and convenience divisions, offset by lower sales revenue following the divestment of the Malaysian grocery retail business.
The group returned to underlying profit of US$33 million in the first half, following a loss in the same period last year.
Its subsidiaries delivered an underlying profit of US$40 million for the half, as compared to US$8 million in the prior year. Underlying losses also dropped to US$7 million, from losses of US$60 million the year prior.
After lease payments, the group’s operating cash flow stands at a net inflow of US$149 million, compared with US$76 million in 1HFY2022.
As at June 30, the group’s net debt increased to US$883 million, compared with US$866 million at Dec 31, 2022.
An interim dividend of 3 US cents per share has been declared, an increase from the 1 US cents per share in 2022.
The group says that revenue for their grocery retail division in 1HFY2023 was lower than the prior year. In North Asia, sales in the 1HFY2022 were supported by pantry-stocking during the fifth wave of Covid-19 in Hong Kong. Southeast Asia Grocery Retail revenue was also lower, impacted by the divestment of the Malaysia Grocery Retail business and ongoing cautious customer sentiment driven by rising cost of living pressures.
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Underlying profit for the convenience division reported like-for-like sales y-o-y, driven by strong foot traffic recovery and effective execution of new product development and promotional activity.
Meanwhile, the health & beauty division reported over 20% like-for-like sales growth, underpinned by effective in-store execution and continued market share gains. Even though growth is still below pre-pandemic levels, underlying profit more than doubled in the first half relative to the prior year, supported by a recovery in customer traffic, gross margin expansion and effective in-store execution despite pressure from labour shortages.
Despite challenges concerning sales performance in the home furnishing division, underlying profit in the first half was largely in line with the prior year, primarily due to strong cost control.
Maxim’s, the group’s 50%-owned associate, reported double-digit sales growth and a turnaround in profit relative to the prior year, when the business faced severe challenges in the first half from COVID-related dining restrictions in Hong Kong and the Chinese mainland.
Finally, the group’s share of Yonghui losses reduced relative to the prior year, due to improvement in gross margins and cost optimization. Robinsons Retail continued to report strong sales and core net earnings growth, but was impacted by foreign exchange movements and reduced associate income.
DFI’s Malaysian grocery retail business sale was completed in early March 2023, and the group will divest several associated properties in Malaysia, with the sale expected to be completed in the second half of the year.
Shares in DFI Retail Group closed at 2 US cents lower, or 0.72% down at US$2.75 on July 28.
