Duty-free retailing group Duty Free International has reported a 165% rise in earnings to RM3.5 million in its 1HFY2023 ended Aug 31, compared to a RM5.4 million loss in the same period a year before.
Revenue for the company in 1HFY2023 rose 29.7% to RM59.1 million, compared to RM45.6 million in 1HFY2022.
Duty Free explained the increase in profit was mainly contributed by higher revenue, along with a higher other operating income of RM1.4 million.
This arises from a net reversal of inventories written down and deposit forfeited, as well as a higher net foreign exchange gain of RM0.8 million.
However, the positive effect was partially offset by higher other operating expenses of RM2.5 million, higher rental fees of RM1.4 million, as well as higher professional fees of RM0.5 million.
For its 2QFY2023, Duty Free also revealed that the higher revenue was mainly because all of the its retail outlets were in full operations.
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This is in contrast to last year, when the Malaysian government imposed the Full Movement Control Order (FMCO) which started on Jun 1, 2021, resulting in none of Duty Free’s retail outlets being in operations during the FMCO period.
In its outlook statement, the company notes that the Malaysian economy registered a strong growth of 8.9% in the second quarter of 2022, and key economic sectors continued to expand in the second quarter of 2022.
Duty Free points out, “consumer-related subsectors such as retail and leisure-related activities continued to recover amid the transition to endemicity, reopening of international borders, improving labour market conditions and the additional support from the Malaysian Government.”
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However, the company is of the view that the rise of global inflation rates and rising operating costs and disruptions in supply chains have impacted the economic recovery rate.
This is brought on by the ongoing geopolitical tensions and the prevailing Covid-19 restrictions in certain Asian countries, especially China.
As such, Duty Free expects the business environment in which it operates to remain challenging, but is also “cautiously optimistic” that its operations and financial performance will gradually improve for the remaining period of the financial year ending 28 February 2023.
Shares of Duty Free closed flat on Oct 12 at 9.1 cents.
