It’s earnings seasons again. Given that many companies have reported their results at the same time, it might be useful to categorise them into three buckets of positive, negative and mixed. In this article, we will look at two companies that have recently reported mixed results.
Japan Foods Holding Ltd (SGX: 5OI) is the first company that I will look at in this article.
As a quick introduction, Japan Foods is a Japanese restaurant chains in Singapore, operating a number of brands such as “Ajisen Ramen”, “Osaka Ohsho” and “Menya Musashi”. It has also expanded beyond Singapore to Malaysia, Vietnam, Hong Kong and Mainland China.
In the latest quarterly earnings update, revenue was up by 2.7% year-on-year to S$16.6 million. Similarly, gross profit climbed 2.4% year-on-year to S$14.1 million. Yet, net profit declined 7.6% year-on-year to S$1.0 million. The decline in net profit was due to lower share of profit from associates. As of 30 June 2018, Japan Foods had no borrowings while cash and bank balances stood at S$24.5 million.
Takahashi Kenichi, executive chairman and chief executive of Japan Foods, commented:
“The Group recently launched two new franchised brands and sales have been encouraging. ‘Konjiki Hototogisu’ is a brand that is quite different from our other ramen brands. It is more upmarket given its Michelin recognition as well as its location at CHIJMES. We are very encouraged by the positive response from customers so far.
“At the same time, we are trying out a new dessert concept with ‘Kagurazaka-Saryo’. While it is known for its sweet treats in Japan, the brand also offers tea-flavoured hotpots called Cha-Nabe. We have made adaptations to include regional flavours such as tom yum to appeal to local taste-buds. We are optimistic that these two new brands will start generating healthy contributions to sales in the next quarter.”
Singapore Post Limited (SGX: S08), or SingPost, is another company that announced positive result recently. As a quick introduction, SingPost is a mail and logistics company, organised into four major segments of Post and Parcel, Logistics, eCommerce and Property.
For the quarter ended 30 June 2018, sales revenue improved 3.3% year-on-year to S$372.6 million. Yet, quarterly operating profit declined 22.3% year-on-year to S$33.3 million. As a result, net profit for the quarter dropped 40.4% year-on-year to S$18.7 million. Excluding exceptional items, underlying net profit was down 9.8% to S$24.7 million. The fall was mainly due to lower contributions from associates investing for growth, and higher tax.
Year to date, SingPost generated free cash flow of S$62.1 million, up from S$32.0 million last year, mainly due to higher operating cash flow and reduction in capital expenditure. As at 30 June 2018, SingPost’s borrowing stood at S$248.2 million while its cash and bank balances stood at S$377.6 million, giving it a net cash position of S$129.4 million. This was an improvement from its net cash position of S$70.1 million as at 31 March 2018.
Paul Coutts, group chief executive of SingPost, said:
“As strong growth in global eCommerce drives cross-border and last-mile deliveries, we are focused on executing well to keep up our operational momentum as we transform SingPost for the future.”
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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.