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SINGAPORE (May 14): Jumbo Group announced earnings of $4.3 million for the 2Q ended March, down by 23.9% from its 2Q17 earnings of $5.7 million due to higher expenses mainly incurred as part of the group’s ongoing expansion.
The latest set of 2Q results brings Jumbo’s earnings for 1H18 to $77.5 million, which is 7.5% up from $72.1 million in the same period a year ago.
Revenue for the latest quarter grew 6% to $41.7 million from $39.4 million previously due to higher contributions from both the group’s Singapore and overseas operations -- buoyed by higher revenue from China with contributions from its first Jumbo Seafood restaurant in Beijing as well as fourth Jumbo restaurant in Shanghai, which commenced operations in Jul and Nov 2017, respectively.
In line with the revenue increase, cost of sales grew 7.8% to $15.3 million from $14.2 million a year ago.
Employee benefits and expenses grew by 25.8% to $13 million from $10.3 million in 2Q17 due to increased headcount for the new outlets in Shanghai and Beijing, as well as an overall increase in headcount of the group’s corporate head offices in Singapore and China to support its regional expansion.
Operating lease expenses grew 5.8% to $3.7 million from just $0.2 million a year ago due to the leases for new outlets in China, and the expansion of the group’s China corporate office.
Other operating expenses grew 16.2% to $4 million a result of more outlets and an expanded China corporate office, coupled with marketing expenses incurred from Jumbo’s 30th anniversary celebrations.
Ang Kiam Meng, CEO and executive director of Jumbo, says the latest quarter’s revenue growth underscores Jumbo’s success in its business expansion strategy as well as the appeal of the Jumbo Seafood brand among consumers within its core markets.
“While the higher expenses associated with the opening of new outlets as well as the performance of new outlets during their initial gestation period were reflected in our Q2 FY2018 results, we believe that these are the necessary short-term costs to support our expansion and JUMBO’s long-term growth story remains intact in view of the rising consumerism in the PRC,” says Ang.
Going forward, the group intends to focus on cost efficiency and improving work flow processes, manpower utilisation and application of information technology systems to increase productivity, efficiency and lower operating costs.
An interim dividend of half cent per share has been declared for the latest quarter under review.
Shares in Jumbo closed 1 cent lower at 56 cents on Monday.