Thanks to consumers panic buying groceries, lockdown measures and work-from-home measures, supermarket operator Sheng Siong saw a significant growth in its latest FY2020 results. 

For its final year ended December, earnings came in at $138.7 million, 83.1% higher than $75.7 million a year ago. 

Revenue for the period also increased by 40.6% to $1.4 billion from $991.3 million last year. As cost of sales increased in tandem to the revenue increase by 39.7% y-o-y to $1.0 billion, gross profit increased by 43.1% y-o-y to $381.9 million. This was all attributed to the elevated demand arising from the Covid-19 pandemic. 

Sheng Siong saw its largest y-o-y revenue improvement in 2QFY2020, which was when Singapore’s circuit breaker was in place. But even as the circuit breaker has lifted, 3QFY2020 saw a 28.9% y-o-y increase in revenue and the momentum continued on to 4QFY2020. 

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Looking at the group’s 4QFY2020 results, results were still impressive as earnings surged 84.5% y-o-y to $32.1 million, while revenue was 28.8% higher y-o-y at $319.3 million. 

Other income saw a significant increase to $41.2 million from just $8.9 million last year, due to government grants. 

Administrative expenses increased by 41.9% y-o-y to $245.2 million, due to an increase in staff costs, which were attributable to the additional headcount needed to cope with the increased volume of consumers and to operate new stores; higher provision for bonus due to higher operating profit; and the additional one month of salary paid to staff in 2QFY2020 for their diligence during the period of elevated demand. 

As at end-December, Sheng Siong’s cash and cash equivalents stood at $253.9 million.

Due to its positive FY2020 results, Sheng Siong has decided to reward its shareholders with a final cash dividend of 3.0 cents per share, payable on May 20. This is about 50% higher than the 1.8 cents declared in FY2019. For the overall FY2020 period, Sheng Siong has paid out 6.5 cents per share in dividends, equivalent to about 70.5% payout of its net profit after tax. 

In its media release, Sheng Siong notes that the demand for groceries elevated in FY2020 because of Covid-19, but has tapered in the second half of FY2020 as restrictions on movements were relaxed. Though tapered, demand was still much higher than pre-Covid-19 levels. 

Looking forward, the Group’s revenue in 2021 will depend on how Covid-19 develops which will affect demand and the timing of the opening of new stores. Furthermore, the competition in the supermarket industry is expected to remain keen among the brick and mortar and on-line players.

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Lim Hock Chee, Sheng Siong’s CEO says, “Despite facing some delays in opening new stores and challenges arising from the outbreak of Covid-19, our expansion plan is still on track. We opened five new stores and closed one in FY2020, bringing our total store count to 63 and expanding our total retail area to 571,150 sq ft.”

“Moving ahead, we remain committed to further expand our footprints by searching for suitable retail outlets in Singapore, particularly in areas where our customers reside but we do not have a presence. We will continue to nurture the growth of the new stores. Our focus is to improve profitability by enhancing gross margin through better cost efficiency in the supply chain as well as changing the sales mix to more fresh produce,” Lim adds.

Shares in Sheng Siong closed 3 cents lower or 1.9% down at $1.57 on Feb 24.