Quarterly Profit at Super Group Limited Turns Stale

Super Group (SGX: S10), an integrated instant food and beverage brand owner with a regional footprint in Asia, released its first quarter results on Monday during market hours.

The F&B firm has two main business segments – Branded Consumer (BC) and Food Ingredients (FI). The former entails the sale of instant coffee mixes, instant tea and cereals, among others. The latter is involved in manufacturing of various beverage-ingredients for sale to other beverage manufacturers.

For the quarter, total revenue dipped 6% year-on-year to S$124.6 million from S$132.4 million in the previous year. Revenue from BC declined 6% to S$88.6m due to slower sales in the Southeast Asia (SEA) markets, especially in Thailand, the largest BC market, due to the civil unrest. Revenue from FI decreased 6% to S$36.0m due mainly to slower sales in SEA, especially the Indonesia market, which was partially offset by recovering sales in the East Asia markets – China, Taiwan, Hong Kong.

Gross profit margin for the quarter, however, improved slightly from 37.1% to 37.5%, due to effective costs management.

Net profit slumped 19% year-on-year to S$18.6m partly due to higher foreign exchange gain of S$2.6 million seen last year as compared to S$0.2 million in the latest quarter. The gain of S$2.6m was due mainly to the appreciation of the US Dollar against the Singapore Dollar during that quarter.

As of 31March 2014, Super Group had a cash balance of S$94.7 million and a total debt of S$960,000. This is a slight worsening from the end of last year as it had S$98.5 million in cash and S$349,000 in borrowings.

For the quarter, the firm generated an operating cash flow of S$5.7 million, a vast improvement from the S$11.9 million in cash used in operations last year. However, capital expenditure was at S$11.3 million due mainly to “construction and equipment costs incurred for the Singapore Tuas factory extension, the new China Changzhou plant, the botanical herbal extraction facility in Malaysia and the Thailand warehouse extension”. This brought free cash flow for the quarter into negative territory.

Chairman and Managing Director of Super Group, Mr David Teo, commented, “Our performance in the first three months of 2014 was weakened in view of the region’s challenging market conditions and rising commodity prices. We will keep up the pace of product innovations, continue offering new products to consumers while further strengthening our brands through continuous brand-building efforts. We will work on these pathways to achieve our key objective of pursuing profitable growth. We remain confident that our integrated business model of Branded Consumer and Food Ingredients businesses allows the Group to be better-prepared in managing the challenges ahead.”

Going forward, the management of Super Group is closely monitoring the political situation in Thailand and will take appropriate measures to counter any impact on its businesses. It is also positive that the on-going efforts on branding and product innovations will generate positive contributions to its operating performance in the longer term and allow the firm to stay ahead of its competitors.

The shares last changed hands on Monday at S$3.23, down 4.7% from Friday’s close. This translates to a price-to-earnings ratio of 18 and a dividend yield of 2.8%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in Super Group Limited.