Dairy Farm, the supermarket and convenience store operator under the Jardine Matheson group, announced earnings of US$276 million ($371.4 million) for the FY2020 ended December, 14% lower than earnings of US$321 million for the FY2019.

Accordingly, earnings per share (EPS) for the FY2020 stood 14% lower y-o-y at 20.03 US cents, from 23.93 US cents in the year before.

“2020 was a challenging year for Dairy Farm, with the Covid-19 pandemic impacting the group’s operations and, as a result, its financial results,” says Ben Keswick, chairman of the Jardine Matheson group.

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“Continued progress in implementing the group’s transformation programme, however, helped the business adapt to the rapidly changing environment, while the diversity of the group’s businesses, coupled with the impact of ongoing efficiency improvement programmes, supported the group’s overall financial performance,” he adds.

FY2020 revenue dropped 8% y-o-y to $10.27 billion, while total sales, including 100% of the group’s associates and joint ventures (JVs) improved 2% y-o-y to US$28.2 billion, primarily due to higher sales contribution from Yonghui.

The group’s subsidiaries saw 6% lower underlying operating profit y-o-y at US$412 million due to lower profit in the Health and Beauty, as well as Convenience businesses, despite the growth in operating profit for Grocery Retail and IKEA.

Revenue for the Grocery Retail business improved by 3% y-o-y to US$5.3 attributable to strong like-for-like sales growth across North Asia and Southeast Asia. This was partly offset by the annualisation impact of the group’s space optimisation programme executed in 2019.

Grocery Retail saw FY2020 operating profit surge over four times to US$267 million from US$63 million due to its diversified retail portfolio, which saw strong profit growth across both North and Southeast Asia, strong like-for-like sales, and government subsidies.

Revenue for the Convenience business fell 4% y-o-y to US$2.1 billion, while operating profit dropped 31% y-o-y to US$57 million due to lower sales, and a sales mix shift towards lower product margin categories.

Revenue for the Health and Beauty Division fell 35% y-o-y to US$2.0 billion due to the impact of the pandemic across all markets, especially in Hong Kong and Macau, where the group’s Mannings business saw a decline in sales due to the lack of tourists from the Chinese mainland. As a result, operating profit for the FY2020 plunged 77.7% y-o-y to US$66 million.

FY2020 revenue for IKEA increased by 9% y-o-y due to new store openings and strong e-commerce growth. IKEA’s operating profit for the year saw almost four times growth to US$71 million due to new store profit contribution, lower cost of goods, strong cost controls, reduced pre-opening expenses and government support.

Contribution from 50%-owned Maxim fell 56.1% y-o-y to US$36 million due to government-imposed restrictions.

The group’s share of underlying results in Yonghui grew 26.1% y-o-y to US$29 million due to strong sales growth.

As at end-December, cash and cash equivalents stood at US$234.2 million.

For the FY2020, the board has declared a final dividend of 11.50 US cents per share, 21% y-o-y lower than the dividend of 16.50 US cents per share in FY2019.

“Despite all adverse external influences, the transformation plan remains on track. While financial results do not yet reflect the efforts made to date, we are confident that the actions being taken remain the right ones and the company is in a far better shape now to face the challenges of the market going forward,” says group CEO Ian McLeod.

Shares in Dairy Farm closed flat at US$4.68, while shares in Jardine Matheson closed 81 US cents higher or 1.3% up at US$65.57 on March 11.