Japan Foods Holding Ltd’s Latest Earnings: The Good And The Bad

Japan Foods Holding Ltd (SGX: 5OI) owns a chain of restaurants in Singapore. As of 31 December 2017, the company has 48 restaurants in Singapore under various brands, and 22 restaurants outside of Singapore in Malaysia, Vietnam, Hong Kong, and China. The company’s restaurant brands include Ajisen Ramen, Menya Musashi, and Osaka Ohsho. 

The company has recently released its third quarter earnings for its fiscal year ending 31 March 2018 (FY2018). Today, we will look at the positive news and negative news from its latest announcement.

1. An earnings snapshot

Source: Japan Foods’ press release

From the above, we can see that most of the key figures show increases, including revenue, gross profit, and net profit. Notably, its net profit grew faster than sales, backed by better cost control. Let’s move on to its positives and negatives next.

2. The positives

Group revenue was up by 11.4% year-on-year, driven by growth in its main brand, Ajisen Ramen. It also benefited from a stronger performance from two other brands, namely Menya Musashi and Shitamachi Tendon Akitmitsu.

Next, gross margin improved from 84.9% in last year’s third quarter to 85.1% in the latest quarter. The better performance came from cost control on its raw material. On another note, operating cash flow for the quarter also came in higher at S$3.14 million, up from S$2.8 million a year ago.

Finally, Japan Food had cash and bank balances of S$20.5 million and no debt, as of 31 December 2017.

3. The negatives

On the flipside, Japan Foods’ Singapore store count declined from 50 (as of 31 December 2016) to 48 restaurants (as of 31 December 2017). Sales for the company’s other brands segment, which includes New ManLee Bak Kut Teh, Kazokutei, Fruit Paradise, Boteyju, Hanamidori, and Dutch Baby Cafe,  fell by S$1.2 million year-on-year due to closure of restaurants, and lower same store sales.

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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.