3 Things Investors Should Know About Dairy Farm International Holdings Ltd’s Latest 2016 Results

Dairy Farm International Holdings Ltd (SGX: D01) is a bricks-and-mortar retail company that runs a variety of retail formats, including hypermarkets, supermarkets, convenience stores, pharmacies, home furnishing stores, and restaurants.

These store formats come under the company’s four business divisions, namely, Food, Health and Beauty, Home Furnishings, and Restaurants. Currently, Dairy Farm has interests in 6,548 stores in 11 countries and territories across Asia. In Singapore, Dairy Farm is the owner of stores such as GuardianCold StorageGiant, and 7-Eleven.

Last week, the retailer reported its 2016 full year results. Let’s look at three useful pieces of information that investors may want to know from the announcement:

1. The overall numbers

Here’s a table showing some important numbers from Dairy Farm’s income statement for 2016 and 2015:

 Dairy Farm income statement 2016
Source: Dairy Farm 2016 full year presentation

We can see that Dairy Farm saw growth in 2016. Revenue was up, and better margins led to faster increases in operating profit and underlying profit too.

The company’s margin improvements were mostly driven by the Food and Home Furnishings divisions, and strong contributions from two associates, namely, Maxim’s in Hong Kong and Yonghui in China.

2. Segmental performance

The following’s a chart showing the changes in sales, operating profit, and store count that Dairy Farm’s business divisions and associates experienced in 2016:

Dairy Farm segmental revenue and profit performance 2016
Source: Dairy Farm 2016 full year presentation

The symbols in the chart respectively represent “Supermarkets and Hypermarkets,” “Convenience Stores,” “Health and Beauty,” “Home Furnishing,” “Restaurants,” and “Yonghui.”

It’s worth noting that most of Dairy Farm’s businesses, with the exception of Health and Beauty, recorded growth in operating profit in 2016.

3. Outlook for 2017

Here’s the company’s outlook for 2017 that was given in its 2016 full year earnings presentation:

Dairy Farm 2017 outlook
Source: Dairy Farm 2016 full year presentation

In short, Dairy Farm thinks that external conditions will continue to be be uncertain, but it will still continue to focus on meeting shoppers’ needs to grow sales. At the same time, the company will also be trying to improve the efficiency of its operations.

To sum up Dairy Farm’s 2016, it was a positive year. As for 2017, investors may want to pay attention to the company’s ability to sustain its profit margins and maintain a reasonable level of sales growth.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The  Motley Fool Singapore has recommended shares of Dairy Farm International Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.