JAPAN Foods sank into the red with a net loss of S$2.9 million for the nine months ended Dec 31, 2024, compared with a net profit of S$668,000 in the corresponding year-ago period.
This was mainly due to higher operating expenses, attributed to an increased number of operating outlets in the 9M period, the group said on Thursday (Feb 6).
Japan Food’s revenue fell 0.6 per cent to S$64.9 million, from S$65.3 million in the same period the year before, due to weak sales in November and December.
Selling and distribution expenses rose 8.3 per cent to S$53.9 million, from S$49.8 million, due to higher manpower costs, utilities expenses and depreciation charges of right-of-use assets, in line with the increased number of operating outlets.
Other operating expenses increased 90 per cent to S$1.5 million in the same period, from S$770,000, mainly due to an increase in the write-off of plant and equipment attributable to the rebranding and closure of restaurants, as well as the relocation of a restaurant in VivoCity mall.
Lease interest expenses rose 6.7 per cent to S$1.24 million, from S$1.16 million, due to a higher number of operating outlets in the period.
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Japan Foods also recorded an allowance for impairment loss on a loan to a joint venture (JV) company, Dining Collective, amounting to S$680,000. This is after its assessment, inter alia, of the performance of the outlets under the JV and challenging market conditions, which led to the decision to wind down the business of the JV.
The group said the local food and beverage industry has been affected by the strong Singapore dollar, which encouraged more Singaporeans to travel and spend overseas.
It expects the business environment to remain tough, with conditions further compounded by ongoing industry challenges including manpower shortages, rising costs of operations due to inflation, and changing consumer preferences.
To overcome these difficulties, the group plans to rationalise its brand portfolio by focusing on its “more established and proven brands”, it said.
It has already decreased the number of operating outlets to 82, from 84, as at Dec 31, 2024.
The group will continue to streamline its operations, manage costs and improve outlet perfromance by stepping up its marketing and promotional efforts, it said.
Shares of Japan Foods closed 1.5 per cent or S$0.005 higher at S$0.335 on Thursday, before the announcement.
