Coffeeshop chain Kimly 's 1HFY2024 earnings dipped by 0.9% y-o-y to $16 million, even with revenue up 1.9% y-o-y to $158.5 million.
The company recorded higher revenue from its outlet management and investment businesses, with contributions from three new shops in FY2023 and another two in 1HFY2024 ended March.
On the other hand, there were four fewer coffeeshop management agreements in FY2023 and two shops were closed in FY2023 and 1HFY204 each.
Its other key business, food retail, recorded higher revenue too, thanks to revenue generated by 13 food stalls, one restaurant and one kiosk opened in FY2023. In 1HFY2024, another three food stalls and two restaurants were opened.
However, revenue from this segment was offset by lower contributions from existing stalls and outlets. Six stalls were also closed in FY2023 and three in 1HFY2024.
Kimly incurred higher labour and finance costs as well.
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As at March 31, Kimly's cash balance was $89.4 million, largely similar to $89.1 million as at end of last September.
Even with the lower earnings, Kimly plans to pay an interim dividend of 1 cent per share, up 78.6% from 0.56 cent paid for 1HFY2023.
Going forward, Kimly warns that the local F&B industry is still coping with competition and "soaring" costs.
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"F&B establishments are expected to struggle with the ongoing manpower shortages, despite offering higher pay to attract and retain talent.
"Additionally, escalating costs of raw materials and utilities pose a significant hurdle, putting considerable strain on food outlets to offer competitive prices while ensuring sustainable profitability," the company says.
To generate new growth, Kimly in February opened its fifth Tenderbest Makcik Tuckshop at Punggol Park - part of its bid to expand further into the halal market.
"We have observed a consistent increase in demand for Halal-certified food, with these products gaining significant traction," says Kimly.
"Given the promising outlook of the industry, we will continue with our efforts to further our expansion in the Halal market."
Kimly shares closed at 31 cents on May 9, down 1.61% for the day and down 7.58% year to date.
