Katrina posts 97% lower 1H earnings on higher costs and outlet closures, says approaching 'critical mass'

Katrina posts 97% lower 1H earnings on higher costs and outlet closures, says approaching 'critical mass'

By: 
Michelle Zhu
14/08/18, 11:24 pm

SINGAPORE (Aug 14): Katrina Group announced earnings of $11,000 for the 1H ended June, down 96.7% from $0.3 million in 1H17 earnings a year ago due to higher costs and the closure of non-performing outlets .

Revenue for 1H18 increased by 11.2% to $30.8 million as the group increased its overall outlet count, while its online revenue continued to grow.

Cost of sales however grew by 13.2% to $28.5 million compared to $25.1 million a year ago due to the opening of new outlets, resulting in higher utilities, rental and employee benefit costs.

Additionally, online sales commission grew to $0.8 million compared to $0.6 million a year ago, in line with the increase in online revenue.

Katrina also booked finance costs of $0.2 million over 1H18 after adjusting for the discounting of refundable rental deposits as well as provision for restoration costs, whereas there was no such valuation done in 1H17.

Notably, the closure of three non-performing outlets in the current financial year led to a significant decrease in profit before tax by 92.6% to $31,000 compared to $0.4 million a year ago.

Going forward, Katrina says it will be more selective in its openings as it nears a “critical mass” of outlets in Singapore.

The group also intends to continue exploring other strategies to build its strength the market as well as increase revenue, while at the same time seeking new businesses and overseas expansion to create steady growth.

“We are approaching a critical mass in terms of our outlets under our existing brands in the local market, and strengthening our bottom-line, online sales, as well as customer satisfaction will be key to our future success in capturing more of the market,” comments Alan Goh, founder, CEO and executive chairman of Katrina.

“Our aim continues to be sustainable growth and we are seeing good progress in the PRC with our second restaurant having been opened in Guangzhou and the third in the works. With growth in mind, we continue to seek viable opportunities locally and regionally, be it in new brands or businesses,” he adds

Shares in Katrina closed 2.6 cents higher at 20 cents on Tuesday.

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