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These 2 Companies Delivered Mixed Results In Their Latest Quarterly Earnings

The earnings season has ended. As is common with every earnings season, there will be some companies posting growth, some posting mixed numbers, and some experiencing declines. Let’s take a look at two companies that delivered mixed numbers:

1. In late November, JUMBO Group Ltd (SGX: 42R) released its fourth quarter results for its financial year ended 30 September 2017 (FY2017).

As a quick introduction, JUMBO is a restaurant operator that is perhaps most famous for the chili crab served in its JUMBO Seafood chain of seafood restaurants. The company also has other restaurant concepts, such as JPOT, NG AH SIO Bak Kut The, Chui Huay Lim Teochew Cuisine and J Café.

In the fourth quarter of FY2017, JUMBO reported revenue of S$38.2 million, up 14.1% year-on-year. But, its net profit attributable to shareholders actually declined by 37.2% to S$2.64 million.

For the whole of FY2017, there was a similar dynamic. JUMBO’s revenue grew 6.1% year-on-year to S$145.1 million, but its net profit attributable to shareholders fell by 6.7% to S$14.47 million, mainly due to higher operating lease and depreciation expenses. These in turn came about due to the opening of new outlets, expansion of existing outlets, and setting up of new corporate offices in Singapore and China.

JUMBO proposed a final dividend of 0.5 cents per share, as well as a special dividend of 0.7 cents per share. These bring JUMBO’s total dividend for FY2017 to 1.7 cents per share, unchanged from FY2016.

In its earnings release, JUMBO said that the food & beverage industry “is expected to continue to be challenging due to pressure on operating costs and keen competition.” JUMBO will be focusing on improving its efficiency and cost structure, and will also continue to look for expansion opportunities. One focus for JUMBO is China; the company intends to “continue expanding the Jumbo Seafood brand to other major Chinese cities, as well as introduce its other brands to [China].”

JUMBO has also recently established a joint-venture for expansion into Taiwan. The company opened its first JUMBO Seafood restaurant in Taiwan on 16 December 2017.

2. In mid-November food & beverage retailer Old Chang Kee Ltd (SGX: 5ML) released its second quarter results for its financial year ending 31 March 2018 (FY2018). The reporting quarter was for the three months ended 30 September 2017.

As a quick introduction, Old Chang Kee has been around since 1956, growing from a single stall outside Rex Cinema to 89 outlets in Singapore as of 31 March 2017. Old Chang Kee may be best known for its signature Curry’O puff, a popular Singapore snack.

In the reporting quarter, Old Chang Kee’s revenue improved by 5.9% year-on-year to S$21.4 million. The company enjoyed revenue contributions from new outlets, and higher sales from existing outlets. These offset lost revenue from stores that were closed.

But despite the higher revenue, Old Chang Kee’s quarterly net profit sank by 52.6% to S$0.75 million, mainly due to higher selling and distribution expenses, an increase in raw material costs, and one-time factory test-runs for the commissioning of new factory equipment.

In its earnings release, Old Chang Kee shared the following on its outlook:

“The Group’s first flagship outlet in London, United Kingdom is targeted to open in 2018, generating new revenue streams for the Group and uplifting Old Chang Kee’s brand positioning.

On the current operations, the Group expects operating lease expenses (rental), labour and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labour market will continue to remain tight.

Following completion of the new factory facilities and the commissioning of new factory equipment in 2Q2018, the Group will be focusing its efforts on improving its gross margins and revenue”

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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.