SINGAPORE (Aug 20): Japanese multi-brand food and beverage group RE&S Holdings saw its earnings fall 11.2% to $0.9 million for the 4Q ended June, from $1.1 million a year ago.

This brings full-year earnings to $3.6 million for FY18, some 37.3% lower than earnings of $5.7 million a year ago.

4Q18 revenue rose slightly by 1.2% to $35.3 million, from $34.9 million a year ago. This was mainly attributable to a newly-opened Ichiban Boshi outlet in 4Q18 and two Ichiban Sushi outlets in prior quarters.

Employee benefits expense increased by 3.4% to $12.0 million in 4Q18, mainly due to an increase in employment related costs to cater to the group’s business expansion needs.

Operating lease expenses increased by 6.8% to $5.9 million in 4Q18, mainly attributable to rental payments for newly opened outlets during the year.

As at end June, cash and cash equivalents stood at $11.9 million.

The board has proposed a final dividend of 0.4 cent per share for FY18, representing a dividend payout of 39.6% of the group’s FY18 net profit.

Looking forward, RE&S says the F&B industry is expected to continue to be challenging, driven by intensifying competition and higher cost pressures posed by a tighter labour and rental market.

The group adds that it seeks to increase its current network of food retail outlets locally, while exploring joint ventures and strategic alliances opportunities to diversify and grow its business offerings outside of Singapore.

To help manage costs, the management will also be tapping on support from the group’s central kitchen to achieve greater operational efficiencies at its F&B outlets.

“As the group seeks to grow its core operations and strengthen its operational capabilities amidst a challenging retail environment, near term profitability has been affected due to initial gestation period and higher operating costs incurred for new concepts and new outlets,” says RE&S executive director and chief executive officer John Yek.

“That said, the underlying fundamentals of the business remains strong with positive cashflow generation. Going forward, we aim to continue growing our network of outlets while optimising business processes for FY2019,” he adds.

Shares in RE&S last closed at 20 cents on Aug 17.