Supermarket operator Sheng Siong posted a net profit of S$29 million for its first quarter ended March 31, up 49.9 per cent from a year earlier on the back of stronger revenue, better gross margin, higher other income and a less-than-proportional increase in operating expenses relative to the rise in revenue.
Revenue climbed 30.7 per cent to S$328.7 million, mostly due to the impact of Covid-19 and better-than-expected Chinese New Year sales.
Earnings per share rose to 1.91 Singapore cents from 1.29 cents in the same period last year.
Sheng Siong also announced that staff, excluding directors, will be rewarded with an additional month's salary for working hard during the period of elevated demand during the quarter.
The group noted that demand and sales rose when the government, responding to the pandemic, raised the country's outbreak alert level from yellow to orange on Feb 7; more people began having meals at home and "loading up their pantry as well".
The group also said that it did not experience major disruptions in its supply chain in the first quarter.
It added that it will continue to look for retail space in areas where it does not have a presence. Before the circuit-breaker measures threw a spanner in the works, Sheng Siong was to have opened five outlets this year, bringing its network to 64 outlets and its retail area to approximately 575,160 sq ft.
The group acknowledged that competition is likely to remain keen, with some international food companies warning of future disruptions to the supply chain and an increase in prices because of the lockdowns imposed in many countries.
When the pandemic situation normalises, the group expects revenue to taper off from the current elevated levels as buffer stocks kept by households are consumed.
"In the meanwhile, we will continue to hold a higher-than-normal level of inventory as a hedge against potential disruption to the supply chain," said the group.
Sheng Siong shares on Tuesday rose one cent to S$1.46 before the results were announced.
This article was first published in The Business Times. Permission required for reproduction.
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