Sheng Siong's FY2018 profits inched up 1.4% to $70.79m

The strong performance was attributed to its 10 new stores.

Supermarket chain Sheng Siong ended 2018 on a high note after it saw its profits edge up 1.4% YoY to $70.79m from $69.79m in 2017, an announcement revealed. Revenue also rose 7.4% YoY from $829.88m to $890.93m.

In Q4, profits grew 4.6% YoY to $17.45m from $16.68m in 2017, whilst revenue jumped 10.7% YoY from $200.32m to $221.8m, according to its financial statement.

The firm largely attributed its strong performance to its new stores which continued to be the major source of revenue growth. Excluding the growth in the Block 506 Tampines store where the retail area was expanded by 15,000 sqft to 25,000 sqft in Q2 2017, comparable same store sales would have decreased by 0.4 percentage points (ppt) in FY2018.

“Our store expansion plans have been well on track where we have opened 10 new stores during the year, bringing our total store count to 54 and expanding our total retail area to 496,200 sqft,” Lim Hock Chee, the Group’s CEO, said in a statement.

Also read: Sheng Siong could open more than 6 stores in 2018

Despite softening consumer sentiment which was highlighted by shrinking supermarket sales as published by Singapore’s Department of Statistics (SingStat), revenue increased 7.4% in FY2018 of which 10.1 ppt was contributed by new stores. This was however offset by a reduction of 5.4 ppt arising from the permanent closure of its The Verge and Woodlands Block 6A stores.

Cash used for capital expenditures amounted to $28.2m consisting mainly of payments for fitting out the new stores, renovating old stores and upgrading supermarkets’ equipment of $15.9m, construction of new warehouse extension of $10.2m, upgrading equipment at the central distribution centre of $900,000 and the purchases by the subsidiary in China of $1.2m.

Also read: Can Sheng Siong repeat its success in China?

“Competition in the supermarket industry is expected to remain keen amongst the traditional brick and mortar, exacerbated by the proliferation of new supermarkets in HDB residential areas, as well as the push by new and existing e-commerce players for market share,” the firm said in its financial statement.

Going into 2019, the Group said it would also continue to look for retail space in new and existing Housing and Development Board (HDB) housing estates, particularly in estates where there is no presence. Sheng Siong noted that since the beginning of 2019, six HDB shops which were won by the competitors via online bidding in 2017 and 2018 are now vacant and have been released for re-tender.

In China, the firm highlighted that a new lease for a second supermarket in Kunming has been signed and should be operational in Q3 2019.