Duty-free retailing group Duty Free International has reported a surge in its earnings for the 3QFY2025 ended Nov 30, 2024 of RM41.6 million ($12.7 million), up 100% from the same period a year ago.
Similarly, the group’s 9MFY2024 earnings surged by 100% to RM39.8 million from RM8.48 million in the same time period a year before.
However, the group says that this higher profit was primarily attributed to the RM69.6 million compensation received from a compulsory land acquisition for two land lots that it owns under its wholly owned subsidiaries Cergasjaya and Cergasjaya Properties.
The Ministry of Home Affair of Malaysia had first issued a compulsory land acquisition notice to DFI for Lot 1683 Bukit Kayu Hitam and PT2209 Bukit Kayu Hitam, which are both situated in Kubang Pasu District, Kedah in the third quarter of 2024.
This acquisition is to make way for a road construction project required to connect the Bukit Kayu Hitam ICQS Complex in Kedah to the CIQ Sadao facility in Thailand.
The compulsory land acquisition will cause a closure of the group’s duty-free business at Bukit Kayu Hitam, Kedah, Malaysia.
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The company on Dec 15, 2024 said that it is dissatisfied with the compensation awarded and has filed an objection by way of a land reference to the High Court.
Meanwhile, Duty Free International says that this increase in profit was partially offset by expenses related to employee and worker termination compensation, the write-off of property, plant, and equipment and right-of-use assets as well as provisions for legal and professional fees associated with the Compulsory Land Acquisition.
Additionally, the positive impact was partially offset by a lower net foreign exchange gain and a RM1.0 million donation as mentioned above.
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The company recorded a revenue of RM41.2 million in 3QFY2025, a 6.3% increase from the same period a year ago.
The growth is due to increased demand for certain products and change in sales mix.
As at Jan 13, the group’s cash and cash equivalents stood at RM157.3 million for the 3QFY2025, and at RM177.8 million for the 9MFY2025.
The group says that it anticipates that the retail business environment will remain challenging throughout the financial year 2025.
This is largely due to the increasing product and operating costs, compounded by inflationary pressures and cautious consumer spending. Furthermore, the permanent closure of the Bukit Kayu Hitam outlet in November 2024, due to the Compulsory Land Acquisition is expected to have an adverse impact on the group’s revenue and profitability moving forward.
Shares in Duty Free International closed flat at 6.1 cents on Jan 13.
