• Sheng Siong saw its net profit jump 83.7 per cent in FY2020 from a year earlier
• Its revenue also improved by 40.6 per cent over the 12-month period
• The supermarket chain attributed the rise to strong sales driven by the Covid-19 pandemic and the opening of new stores
• News of its growth in profits comes a month after Sheng Siong rewarded its employees with massive bonuses

SINGAPORE — Supermarket chain Sheng Siong's net profit jumped 83.7 per cent year-on-year for financial year (FY) 2020, backed by strong sales driven by the Covid-19 pandemic and the opening of five new stores.

Net profit stood at S$139.1 million for the full year ended Dec 31, 2020, the company said in a Singapore Exchange filing on Wednesday (Feb 24).

The strong results come a month after Sheng Siong rewarded its employees with massive bonuses of up to 16 months, inclusive of the annual wage supplement.

In a media statement on Wednesday, Mr Lim Hock Chee, the group's chief executive officer, said: “Despite facing some delays in opening new stores and challenges arising from the outbreak of Covid-19, our expansion plan is still on track.

“We opened five new stores and closed one in FY2020, bringing our total store count to 63 and expanding our total retail area to 571,150 sqf,” he said.

The locations of new stores that Sheng Siong opened last year included Block 872C Tampines Street 86 and Block 455 Sengkang West Avenue.

The supermarket chain said that its revenue had risen by 40.6 per cent year-on-year in the last financial year to S$1.39 billion.

About three quarters of this increase came from existing stores, and about one quarter was from new stores. Sheng Siong operates two outlets in China, which accounted for a small portion of the increased sales.

Sheng Siong said that demand at its supermarkets rose in the first half of last year when Singapore raised its Disease Outbreak Response System Condition to “Orange” level on Feb 7 and then imposed a circuit breaker restricting people’s movement from April to June. During this period, consumers were unable to dine out and ate at home, noted the chain.

“Demand remained elevated even though the circuit breaker was lifted towards the end of the second quarter of 2020 as caution prevailed and working from home was encouraged,” said Sheng Siong in its statement.

INCREASE IN ADMIN EXPENSES OFFSET BY LOWER RENTAL AND TAX

The chain noted that while its administrative expenses had increased by S$72.6 million over the 12-month period, this was partially offset by lower rental and property tax.

Administrative expenses had gone up due to higher staff headcount and longer working hours for staff as well as additional monthly salary and higher staff bonuses awarded to them.

At the same time, rental decreased as leases were “capitalised as right-of-use assets” and property tax rebates by the Government last year contributed to savings in its property taxes, said Sheng Siong.

It added that the group’s balance sheet “remained healthy” with cash of S$253.9 million as at 31 Dec last year.

SHENG SIONG’S FINANCIAL OUTLOOK FOR THIS YEAR

The supermarket chain said that its revenue this year will depend on how the pandemic develops. This will affect the demand and timing of the opening of its new stores.

It noted that though demand for its products had tapered off in the second half of FY2020 due to relaxation in Covid-19 restrictions, demand was “still much higher” than pre-Covid-19 levels.

“The group will continue to look for retail space in new and existing HDB housing estates, particularly in locations where the group has no presence,” it added.

With the Covid-19 situation improving this year, Sheng Siong said that it expects government support for businesses to be reduced this year.

Its input prices could also be affected by risks to disruptions in the food supply due to the pandemic or other geo-political events, it added.

Sheng Siong is proposing a final dividend of three cents per share, subject to shareholder approval, taking its full-year dividend payout to 6.5 cents per share, which represents 70.5 per cent of the company’s full-year net profit.