In mid-February, JUMBO Group Ltd (SGX: 42R) released its first quarter earnings update for its fiscal year ending 30 September 2018 (FY2018). 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.
Let’s take a quick look at the positive and negative points from the company’s results.
1. The Positives
Let’s begin with the positive points first.
For one, JUMBO Group’s revenue was up 9.3% year-on-year to S$35.7 million. Sales benefited from better sales from Singapore and China. The company also announced its entry into Taiwan through a franchising agreement with a local joint venture partner for its JUMBO Seafood brand.
Finally, the company’s balance sheet remains strong, ending the first fiscal quarter with $51.9 million in cash and cash equivalents and zero debt.
2. The Negatives
On the flipside, gross profit margin for the first-quarter of FY2018 was lower at 62.7%, compared to the gross margin of 64.2% it recorded for the first-quarter in FY2017. The narrower margins was due to higher promotional activity at its Singapore and China restaurants.
Net profit also declined 22.7% year-on-year to S$2.1 million. The fall in profit was due to the promotional activities mentioned above, coupled with an increase in expenses from the opening of new outlets.
Moving forward, JUMBO Group expects the food and beverage industry to be challenging due to pressure on its operating costs and competition.
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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.