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Old Chang Kee reports 11.2% decline in profit for the 2HFY2022 as inflationary pressures rise

Khairani Afifi Noordin
Khairani Afifi Noordin • 3 min read
Old Chang Kee reports 11.2% decline in profit for the 2HFY2022 as inflationary pressures rise
This brings profit for the FY2022 to $5.7 million, a 35% decline from FY2021 profit at $8.7 million.
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Snacks and beverage chain Old Chang Kee has reported profit of $2.3 million for the 2HFY2022 ended March 31, an 11.2% decline from the same period the year before.

This brings profit for the FY2022 to $5.7 million, a 35% decline from FY2021 profit at $8.7 million.

Earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 1.90 cents and 4.68 cents respectively, from EPS of 2.14 cents and 7.20 cents in the same previous periods respectively.

Revenue for 2HFY2022 at $39 million increased by 4.9%, mainly due to higher retail, delivery and catering sales as a result of the Singapore economy gradual reopening.

As at March 31, Old Chang Kee operates a total of 83 outlets in Singapore, as compared to 92 outlets as at 31 March 2021.

Revenue from retail outlets increased by 2.7% in 2HFY2022, mainly due to incremental revenue from new outlets and increase in revenue from existing outlets; partially offset by a decrease in revenue from closed outlets.

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The company’s gross profit margin decreased by 1% to 64.2% in 2HFY2022, mainly due to higher production staff salaries, food costs and utility expenses during the period.

As a percentage of revenue, total selling and distribution expenses increased from 43.1% to 44.1%, largely due to higher staff costs, subcontract fees, and utility expenses as well as lower rental rebates of about $381,000 received from landlords. This is partially offset by lower depreciation expenses during 2H2022.

Other income decreased by about $689,000 due to lower Job Support Scheme grants and lower gain from disposal of assets, partially offset by an increase in other government grants received for the current period.

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For FY2022, Old Chang Kee’s revenue increased by $2.2 million or 2.9% to $77.5 million. Revenue from retail outlets increased by about $8.7 million or 14.1%.

Revenue from other services, such as delivery and catering services, decreased by about $6.5 million mainly due to the absence of catering of packed meals to foreign workers' dormitories in the financial period from April 1, 2021 to Sept 30, 2021. This was partially offset by higher delivery and catering revenue in 2H2022.

The company’s gross margin dropped by 1.3% to 64.3% in FY2022, mainly due to higher food costs from the absence of economies of scale savings from the large-scale catering, an increase in raw materials costs and higher utility expenses during the year.

A final dividend of 1 cent per share has been declared for the period.

Although its retail revenue continues to show improvements and remains fairly resilient for the year ended March 31, significant uncertainties still hang over the entire retail sector, both in Singapore and overseas.

The company highlights that inflationary pressures have increased, particularly relating to raw materials, utility and labour costs — while rental costs have remained elevated. Singapore’s ongoing curbs on foreign manpower and persistent virus infections have also exacerbated the current manpower shortage in the retail sector.

“The group will continue with our efforts to reduce operating costs, improve operational efficiencies and seek more non-retail revenue streams, including further enhancing our e-commerce presence and working with major e-commerce players during this challenging period.”

Shares in Old Chang Kee closed flat on May 30 at 68 cents.

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