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Japan Foods sinks into $0.5 mil net loss for FY2024

Douglas Toh
Douglas Toh • 3 min read
Japan Foods sinks into $0.5 mil net loss for FY2024
The company's expansion of its Halal-concept restaurants have been a key driver to growth. Photo: Albert Chua/ The Edge Singapore
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Japan Foods Holdings has reported a net loss of $495,000 for its FY20204 ended March, compared to its earnings of $4.13 million a year ago. In a May 24 announcement, the company attributed this to a 17.7% y-o-y increase in selling and distribution expenses due to higher manpower costs, utilities expenses and depreciation charges.

Losses per share for the period came in at 0.28 cents, from earnings per share of 2.37 cents per share in the FY2023.

The company’s revenue rose 10.0% y-o-y to $86.4 million in FY2024, lifted mainly by the significant expansion of its restaurant network to 79 restaurants from 65 the year prior, driven by the continued growth of its Halal-concept segment.

Japan Foods’ gross profit during the period also grew 10.1% y-o-y to $73.1 million, while its gross profit margin saw an increase of 0.1 basis points (bps) y-o-y to 84.7%, as menu prices were adjusted to reflect the higher cost of raw materials.

As at March 31, Japan Foods remained debt-free with cash and bank balances of $11.5 million. 

The Board has proposed a dividend policy to pay out at least 50% of net profit attributable to shareholders. 

See also: Japan Foods’ 3QFY2024 net profit down 79.4% y-o-y on higher costs

Despite reporting a net loss for FY2024, the Boardis proposing a final dividend of 0.2 cents per share. Together with the interim dividend of 0.3 cents per share, Japan Foods will pay a total dividend of 0.5 cents per share for FY2024. 

The group expects the next 12 months to remain challenging due to prevailing market conditions. These include intense industry competition, the persistent manpower crunch and high raw material and operational costs arising from inflationary pressures. 

Takahashi Kenichi, executive chairman and CEO of Japan Foods, says: “The significant expansion of our network in FY2024 was partly because there were opportunities to secure some good locations and we had assessed these taking into consideration expiring leases that we do not intend to renew because of low customer traffic.”

See also: RHB keeps ‘neutral’ on Japan Foods, lowers target price after 9MFY2024 update

He adds: “Looking ahead, network expansion is likely to be at a more measured pace as we shift our focus to improving profitability by driving the performance of individual restaurants, while exercising financial prudence to manage our expenses. While we rejuvenate existing brands, we will also continue to innovate and whet the appetite of diners by delivering new offerings with refreshing ideas and concepts.”

The latest addition to Japan Foods’ brand family is Katsuyoshi. This is the group’s first self-developed katsu concept brand and the first store opened in Plaza Singapura in April.

In January, Japan Foods announced it had been hit by a ransomware incident. 

Shares in Japan Foods closed flat at 26 cents on May 24.

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