SINGAPORE – Supermarket chain Sheng Siong’s net profit declined 4.6 per cent to $32.8 million in the third quarter ending Sept 30, from $34.4 million a year ago.
Revenue fell 4.2 per cent to $333.5 million from $348.1 million in the third quarter of 2021, said Sheng Siong in a bourse filing on Thursday.
However, the grocery giant noted that revenue levels have normalised, coming down from the high base created a year ago by the elevated demand from the Covid-19 restrictions then in place. The restrictions had extended to the closures of the Jurong Fishery Port in July last year, followed by Pasir Panjang Wholesale Centre last September.
Sheng Siong said in its filing: “As the Covid-19 measures were lifted starting in the second quarter of financial year 2022 and consumption patterns shifted to dining out, the revenue has tapered to a new normal.”
The supermarket chain’s earnings per share fell to 2.18 cents from 2.29 cents a year ago.
Its operating expenses rose 1 per cent to $62.3 million on the back of higher energy costs driving an increase in administrative expenses.
The group’s total retail area and store count continued to grow, in line with its outlet expansion plans. It opened three new stores and closed one in financial year 2022, and now has 66 stores in total.
Sheng Siong said competition in the supermarket industry is expected to remain keen, particularly in this heightened inflationary environment.
The central banks’ move to tighten their monetary policy to battle rising inflation will likely exacerbate the drag on economic activity, it added.
As disposable incomes become constrained, consumers may attempt to cut costs by eating out less.
But Sheng Siong’s chief executive officer Lim Hock Chee said the company is uniquely positioned to capture consumers’ shift into savings mode because it is known for delivering value for money and good-quality, fresh products.
“Having said this, we are aware of the heightened near-term challenges arising from high inflation, Covid-19 pandemic-induced supply chain disruptions and geopolitical tensions that could increase costs and affect our margins.”
Sheng Siong also identified higher input costs, such as energy expenses, and excessive promotions by competitors as other factors that could erode margins.
It added that it will seek growth by expanding its network of stores in Singapore, especially in areas where it does not have outlets, in tandem with the supply of new public housing estates this year and the next.
Sheng Siong shares were trading down two cents, or 1.2 per cent, at $1.59 as at 10.34 am on Friday after its results announcement. THE BUSINESS TIMES
