SINGAPORE (Mar 5): Supermarket operator Dairy Farm, a Jardine Matheson company, today announced that its FY2019 earnings have surged 282% to US$324 million ($488.8 million) from US$85 million in FY2018.

This was mainly due to the absence of a one-off restructuring cost of about US$435.4 million in FY2018, which led Dairy Farm to a US$273 million loss on net non-trading items a year ago.

Stripping off the one-offs, underlying earnings for FY2019 were 10% lower y-o-y at US$321 million, from US$358 million a year ago.

This came on the back of a 5% fall in revenue to US$11.2 billion from US$11.7 billion a year ago.

Meanwhile, combined total sales of US$27.7 billion, including 100% of associates and joint ventures, were 26% higher, reflecting the investment in Robinsons Retail in the prior year.

The divestment of the Rustan Supercenters business, as well as the execution of the group’s space optimisation plan in Southeast Asia, led to overall sales for the grocery retail business reducing by 12% to US$5.2 billion.

Sales in the Convenience business increased by 4% to US$2.2 billion, driven by new store growth and strong like-for-like sales in the Chinese mainland in particular. Enhancements to range and services are proving popular with customers and the business continues to focus on brand differentiation to support sales growth.

Total sales for the Health and Beauty Division increased by 1% to US$3.1 billion, supported by the consolidation of Rose Pharmacy as well as strong growth in other Southeast Asian markets.

In Home Furnishings, sales for IKEA were up 6% in the year. Operating margins were, however, adversely affected through a combination of currency movements, cost of goods changes and pre-opening costs in support of strong store expansion.

The contribution from key associate Maxim’s declined to US$82 million from US$105 million in the prior year, as the business was impacted by the ongoing social unrest in Hong Kong. Despite the challenging market conditions in the second half, however, Maxim reported a 4% growth in sales overall for the year, as it saw the benefit of its acquisition of the Starbucks Thailand business.

While the group began to see some early benefits from its transformation programme, profitability was impacted by market conditions in Hong Kong in the second half of the year caused by social unrest.

The ongoing Covid-19 outbreak has added extra complexity for the group’s businesses and the group’s results are being significantly impacted by it. The group says that performance for the remainder of the year will depend on the duration, geographic extent and impact of the outbreak and the measures taken to control it.

However, the group’s diverse retail portfolio does provide some insulation against market uncertainties and Dairy Farm remains firmly focused on the successful delivery of its transformation.

Shares in Dairy Farm closed 1.5% lower at US$4.75 on Thursday, before the results announcement.