Virus crisis to hit Dairy Farm's North Asia earnings

Restaurant earnings fell 30% during the SARS outbreak in 2003.

The COVID-19 outbreak is expected to have an impact on Dairy Farm’s North Asia earnings and cloud near-term convenience and restaurant earnings, according to a report by CGS-CIMB.

In 2003, during the SARS outbreak, restaurant earnings before interest and tax (EBIT) fell 30% YoY, whilst convenience store EBIT shrank 10% YoY as footfall fell in both formats.

The firm’s food EBIT is estimated to have grown 50% YoY in 2019 as its profitability for SEA improved with the ongoing restructuring. However, earnings for the convenience store segment fell about 6.2% YoY due to pre-opening costs for its new 7- Eleven stores in Guangdong.

“We are heartened that DFI’s multi-year transformation programme is bearing fruit in its SEA food business; however, the near-term uncertainties in Hong Kong, DFI’s main earnings contributor over the past three years, are still too large to ignore,” CGS-CIMB analyst Cezzane See said.

Meanwhile, its health and beauty (H&B) segment fell 10.1% YoY as the company saw protest pressures bring down its H2 2019 EBIT down 29% YoY, whilst home & furnishings (H&F) segment EBIT crashed 33.2% YoY on higher pre-operating costs for upcoming stores.

As a whole, the underlying operating profit of Dairy Farm’s subsidiaries fell 14% YoY to $605.33m (US$437m) in 2019, primarily due to social unrest in Hong Kong which disrupted trading in the latter half of the year.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia