SINGAPORE (Aug 14): Sakae Holdings swung back to profitability in 2Q17 and 1H17 with earnings of $2.3 million and $0.8 million respectively.
Group revenue for 2Q17 totalled $16.6 million, a decrease of 21.8% compared to $21.3 million in 2Q16.
This followed the effects of sluggish economic conditions which led to weaker market sentiments globally.
The rationalisation of non-performing outlets in the Singapore market also contributed to the fall in group revenue.
Group revenue in 2Q17 included a new stream of revenue from commodities trading of $0.2 million as well as revenue from food trading revenue of $1.7 million.
Excluding both the food and commodities trading businesses with lower gross profit margin, the group’s gross profit margin from the retail business decreased from 67.7% in 2Q16 to 60.5% in 2Q17.
The reduction in gross profit margin was due to the effect of continuous rising prices of high quality raw materials as well as low pricing margins due to fierce market competition.
Higher government grants recorded in 2Q17 led to an increase of 14.4% in other operating income to $1.1 million in 2Q17 from $0.9 million in 2Q16.
Administrative expenses came in at $6.3 million in 2Q17, a decrease of 35.2% from 2Q16 led by a substantial decrease in labour costs.
Other operating expenses decreased 30.5% to $4.2 million in 2Q17 as the group continued to carry out its rationalisation exercise on non-performing outlets.
Following the judgment handed down by the High Court in April in relation to its investments in associate, Griffin Real Estate Investment Holdings (GREIH), the company also received from Mr Andy Ong the sum of $3.2 million in May.
Offseting the legal fees incurred by the company of $0.3 million, the company recorded a net non-operating income of $2.9 million in 2Q17.
Looking ahead, Sakae says the F&B industry will continue to remain challenging as labour costs will continue to rise, together with acute labour shortages and high rental costs.
Shares in Sakae closed at 30 cents on Monday.