Total H1 profit, which includes non-trading items, stands at US$95.1 million, up from US$8.2 million last year

 

SUPERMARKET and retail store operator DFI Retail Group&rsquo s : D01 -0.57%underlying profit more than doubled year on year to US$75.6 million for H1 ended June, from US$33.3 million in the year before.

 

Its total H1 profit, which includes non-trading items, stood at US$95.1 million, up from US$8.2 million the year prior. This came even as its half-year revenue fell 4 per cent to US$4.4 billion.

 

On the back of this result, DFI declared an interim dividend of 3.5 US cents per share, an increase of 17 per cent compared to the same period last year.

 

The company&rsquo s food division&rsquo s revenue fell marginally to US$1.6 billion, after excluding the impact of the divestment of its Malaysia food business last year. However, thanks to an improved sales mix and cost control, divisional profit increased to US$26 million.

 

&ldquo While Singapore food like-for-like sales performance continued to be affected by challenging consumer sentiment, a better product margin mix and strong cost control significantly improved profitability,&rdquo DFI said in its earnings statement.

 

In the convenience division, profit grew 73 per cent as a &ldquo favourable product mix shift towards non-cigarette categories supported margin accretion and profit growth across all markets&rdquo , it added.

 

Sales for the health and beauty division were relatively stable, with profit up 3 per cent. However, Hong Kong performance in Q2 was hit by factors such as outbound travel during the Easter and Qing Ming Festival holidays, and weaker performance from tourist cluster stores due to bad weather conditions.

 

That said, health and beauty retailer Guardian achieved &ldquo solid&rdquo like-for-like sales growth in H1, driven by &ldquo effective in-store execution and promotions&rdquo , particularly in Indonesia.

 

In the home furnishings division, the challenging residential property market remains an overhang on the sales performance, said DFI.

 

Looking ahead, DFI reiterated its guidance for 2024 underlying profit to be between US$180 million and US$220 million.

 

However, the company expects H2 to &ldquo remain challenging, given macro uncertainties, shifting customer behaviours and increased levels of outbound travel, particularly into the Chinese mainland from Hong Kong&rdquo .

 

In response, DFI plans to tap into larger addressable markets with earnings-accretive opportunities and accelerate monetisation initiatives from its yuu Rewards loyalty programme.

 

Profit growth trend expected to decelerate over the remainder of the year

 

DFI Retail Group : D01 -0.53% said in a bourse filing on Thursday (May 23) that it continues to expect its underlying profit for FY2024 to be between US$180 million and US$220 million, in line with its guidance released in March this year.

 

Although the group reported strong profit growth in the first quarter, the growth trend is expected to decelerate over the remainder of the year, reflecting the group&rsquo s stronger performance in the comparable period last year.

 

In its interim management statement for Q1 FY2024, the group said that its underlying subsidiary revenues, excluding the impact of divestments, increased by 2 per cent compared to the same period in FY2023.

 

The group&rsquo s underlying profits grew by over 60 per cent in the period, driven primarily by improved profit performance across its subsidiaries.  

 

The retailer, which is a member of the Jardine Matheson Group, said that its food retail division reported like-for-like sales slightly behind the first quarter of 2023.

 

Within North Asia, like-for-like sales continued to be affected by reduced consumer spending on groceries and increased outbound travel.

 

In South-east Asia, like-for-like sales marginally increased relative to the same period last year, supported by good festive trading performance, despite a slow start to the year.

 

Like-for-like sales for the group&rsquo s convenience division in Q1 increased compared to the same period last year. Sales were supported by good performance in Macau, South China and Singapore. However, like-for-like sales in 7-11 convenience stores in Hong Kong were &ldquo adversely affected&rdquo by reduced cigarette demand, said the group.

 

The group&rsquo s health and beauty division, which includes pharmacies like Guardian, reported &ldquo high-single-digit&rdquo like-for-like sales growth in Q1 while home furnishings reported &ldquo significantly lower&rdquo underlying profit due to a challenging macroeconomic environment.

 

The Hong Kong and Indonesia markets, for instance, were negatively affected by high interest rates, a dampened housing market and higher levels of outbound travel. In Taiwan, however, Ikea reported solid like-for-like sales performance.