Japan Foods has sunk into the red with a net loss of S$576,000 for its second half year ended March, compared with a net profit of S$1.8 million in the previous corresponding period.
This was mainly due to a 14.7 per cent higher selling and distribution expenses at S$34.5 million, despite a 7 per cent rise in revenue to S$43.4 million for the half year, based on the group’s financials released on Friday (May 24).
Loss per share for the period stood at S$0.0033, from an earnings per share of S$0.0103 the previous year.
A final dividend of S$0.002 per share was proposed for the half year for shareholders’ approval at its upcoming annual general meeting. Together with an interim dividend of S$0.003 per share, it will take total dividend for FY2024 to S$0.005 per share. The date payable will be announced later.
Additionally, the board is revising the company’s dividend policy to distribute dividends of at least 50 per cent of the group’s audited consolidated net profit attributable to shareholders for the current financial year ending Mar 31, 2025, and onwards. This is, however, subject to the group’s business requirements and other relevant considerations and barring unforeseen circumstances.
For FY2024, the group’s net loss stood at S$495,000, compared with a net profit of S$4.1 million in FY2023. This was despite a 10 per cent rise in its top line to S$86.4 million, driven by the expansion of its restaurant network to 79 restaurants from 65 in FY2023.
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The net loss was mainly due to a 17.7 per cent year-on-year increase in selling and distribution expenses due to higher manpower costs, utilities expenses, and depreciation charges of plant and equipment and right-of-use assets, said the group.
In addition, the group also incurred a write-off of renovation costs due to the rebranding of outlets, impairment loss relating to certain non-performing stores, and impairment loss on a loan provided to a joint venture company due to the cessation of the “Siam Smith” brand restaurant in Tokyo.
Japan Foods noted that the “significant” expansion in its restaurant network and brand portfolio will contribute to the group’s future revenue growth, and the increase in the number of halal concept restaurants will solidify its position in this segment of the market.
“The group expects the next 12 months to remain challenging due to prevailing market conditions. These include intense industry competition, the persistent manpower crunch and high raw material and operational costs arising from inflationary pressures,” it said.
Takahashi Kenichi, executive chairman and chief executive officer of Japan Foods, explained that the aggressive expansion of its network was partly because there were opportunities to secure some good locations.
“Looking ahead, network expansion is likely to be at a more measured pace as we shift our focus to improving profitability by driving the performance of individual restaurants, while exercising financial prudence to manage our expenses,” he said.
Shares of Japan Foods : 5OI 0% closed flat on Thursday at S$0.26.
