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The Good And The Bad That Investors Should Know About Dairy Farm International Holdings Ltd’s 2017 First Half Earnings

Dairy Farm International Holdings Ltd (SGX: D01) is a pan-Asian retailer with over 6,600 outlets. The company’s stores are in a wide variety of formats, including supermarkets, hypermarkets, convenience stores, pharmacies, home furnishing stores, and restaurants.

In Singapore, Dairy Farm is the owner of stores such as GuardianCold StorageGiant, and 7-Eleven.

In early August, the company released its 2017 first half results. There are both positive and negative takeaways that investors may want to learn about. Let’s take a look:

1. The positives

Firstly, all of Dairy Farm’s businesses (with the exception of its supermarkets & hypermarkets segment) delivered growth in revenue and operating profit in the first half of 2017 on a year-on-year basis.

Secondly, one of the key performance drivers for the reporting period was the stronger performance by the company’s associates and joint ventures. The standouts there were Yong Hui and Maxim.

Thirdly, operating margins were either improved or maintained for all the business segments within Dairy Farm, with the exception of the supermarkets & hypermarkets segment.

Last but not least, free cash flow for the first half of 2017 improved to US$133 million (it was US$63 million in the same period last year) mainly due to an improvement in the management of working capital.

2. The negatives

Firstly, revenue was down by 1% to US$5.51 billion, due mainly to challenges faced in the supermarkets & hypermarkets business.

Secondly, Dairy Farm’s Singapore and Malaysia businesses reported lower operating profit due to difficult trading conditions and increased competition, respectively. The store formats in the two countries are mainly of the supermarket, hypermarket, convenience stores, and health and beauty varieties.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for Dairy Farm.