TIDMDFI TIDMJAR TIDMJDS
RNS Number : 3788G
Dairy Farm International Hldgs Ltd
01 March 2018
To: Business Editor 1st March 2018
For immediate
release
PT HERO SUPERMARKET TBK
FULL YEAR 2017 RESULTS
The following announcement was issued today by the Company's
84.5%-owned subsidiary, PT Hero Supermarket Tbk.
For further information, please contact:
Dairy Farm Management Services
Limited
Neil Galloway (852) 2299 1896
Brunswick Group Limited
Karin Wong (852) 3512 5077
Tangerang Selatan, 1(st) March 2018
PT HERO SUPERMARKET TBK
FULL YEAR 2017 RESULTS
Highlights
-- Net revenue down 5%, held back by Food business
-- Net loss of Rp 191 billion, impacted by one-off costs of Rp
366 billion, related mostly to impairment of assets and stock
clearance
-- Strong performance in Health and Beauty and IKEA
"The Food business remains challenging, while the Non-Food
businesses continue to grow strongly. A strategic review of the
Food business is being undertaken to identify the actions required
to rebuild its competitive positioning which is essential to
deliver long-term growth and profitability."
Stephane Deutsch
President Director
Results
Audited Full
Year
2017 2016 Change
-------------------
Rp billion Rp billion %
------------------- ------------------ -------------- ------------- -------
Net Revenue* 13,034 13,678 -5
Gross Profit* 3,442 3,570 -4
Operating (Loss)/
Profit (249) 206 n.m.
(Loss)/ Profit
for the year - Underlying* (191) 152 n.m.
- Discontinued** - (32) n.m.
- Total (191) 121 n.m.
Rp Rp %
------------------- ------------------ -------------- ------------- -------
(Loss)/ Profit
per share - Underlying* (46) 36 n.m.
- Discontinued** - (7) n.m.
- Total (46) 29 n.m.
-------------------------------------- -------------- ------------- -------
* Excluding Starmart operations
** Starmart operations
n.m. = not meaningful
PRESIDENT DIRECTOR'S STATEMENT
Overview
The Company's performance for 2017 was disappointing. The
decline in sales in the Food business together with the one-off
provision, mostly for the impairment of assets and the clearance or
write-off of poor quality and slow moving stock negatively impacted
overall Company performance. Despite the challenges facing Food,
both the Guardian and IKEA businesses performed strongly and
reported higher sales and profits.
Financial Performance
Total sales in 2017 were 5% lower than the prior year at Rp
13,034 billion driven by weak Food sales. The Company recorded net
loss of Rp 191 billion, down from net income of Rp 121 billion in
the same period last year, due to one-off costs of Rp 366 billion
related mostly to impairment of assets and stock clearance or
write-offs in the Food business.
Sales in the Food business declined by 7% to Rp 10,859 billion
due to negative like-for-like sales, due to a weaker performance in
both supermarkets and hypermarkets. The business reported an
underlying operating loss of Rp 434 billion, compared with a profit
of Rp 91 billion in the prior year.
In contrast to the Food business, sales in the Non-Food
businesses grew 10% to Rp 2,174 billion, principally driven by
strong like-for-like sales growth for both IKEA and Guardian.
Operating profit increased 60% to Rp 282 billion.
Despite the fall in profitability, free cash flow for the year
was Rp 40 billion compared with Rp 7 billion in the prior year,
driven by higher Non-Food profit and better working capital, which
is more than offset a decline in operating profit from the Food
business.
As at 31(st) December 2017, the Company had net cash of Rp 226
billion, compared to Rp 183 billion at the end of 2016.
Business Activities
In Food, a strategic review is underway to identify necessary
actions to address the underperformance in the business as well as
growth opportunities. Initial actions have been addressing to the
loss-making Food stores and poor quality stock, particularly in
General Merchandise, through clearance activities. Initiatives are
also ongoing to improve sales in Food, including revisiting
promotional activity, together with reviews of our range and the
competitiveness of pricing strategies across formats. The
competitive landscape is changing with the development of more
convenient shopping, as well as the evolving behaviors of
consumers, and we need to respond more effectively to these changes
in market environment. We are piloting a number of new digital
initiatives, which include a partnership with GO-JEK launched in
the fourth quarter of 2017, which will allow customers access to
our stores on this platform. We have also invested to reinvigorate
our upscale Hero Supermarket brand through a store revitalization
programme, which is yielding encouraging initial results.
In Guardian, the business has recovered well from a store
rationalization programme in 2016 and has experienced strong growth
in several categories, particularly in beauty. Work continues on
further range refinement as the business becomes increasingly
responsive to local customer needs.
In IKEA, the sales performance was significantly ahead of the
prior year with increased customer traffic. IKEA's online business
continues to grow and has offered nationwide coverage from the
fourth quarter of 2017, supported by a third IKEA e-commerce
Distribution Point opened in Giant Ekstra Harapan Indah. Work is
continuing on securing the necessary approvals for construction of
a second store on a site acquired in Jakarta Garden City, and
additional sites for further stores have been identified and are
under review.
As at 31(st) December 2017, the Company operated 449 stores,
comprising 58 Giant Ekstra, 105 Giant Ekspres, 32 Hero Supermarket,
3 Giant Mart, 250 Guardian stores, and one IKEA store.
People
Ilauddin Sopian and Rituraj Mohan have joined the Board and have
replaced Xavier Jacques Albert Thiry and Mark Edward Magee. I will
be stepping down as President Director in May 2018 after serving
the Company for four years.
Despite the challenging operating environment our team members
have continued to focus on meeting our customers' needs, and on
behalf of the Board I would like to thank them for their efforts
and continuing support in the year ahead as we seek to build a
stronger foundation for future growth.
Prospects
The Food business remains challenging, while the Non-Food
businesses continue to grow strongly. A strategic review of the
Food business is being undertaken to identify the actions required
to rebuild its competitive positioning which is essential to
deliver long-term growth and profitability.
Stephane Deutsch
President Director
1(st) March 2018
- end -
For further information contact:
Stephane Deutsch, President Director
PT Hero Supermarket Tbk
Tel: +62-21-8378 8388, Fax: +62-21-831 7764
This information is provided by RNS
The company news service from the London Stock Exchange
END
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