TIDMDFI TIDMJAR TIDMJDS
RNS Number : 1985Y
Dairy Farm International Hldgs Ltd
01 March 2017
To: Business Editor 1st March 2017
For immediate release
PT HERO SUPERMARKET TBK
2016 FULL YEAR RESULTS
The following announcement was issued today by the Company's
84.4%-owned subsidiary, PT Hero Supermarket Tbk.
For further information, please contact:
Dairy Farm Management Services
Limited
Neil Galloway (852) 2299 1896
Brunswick Group Limited
Siobhan Xiaohui Zheng (852) 3512 5044
South Tangerang, 1(st) March 2017
PT HERO SUPERMARKET TBK
2016 FULL YEAR RESULTS
Highlights
-- Net revenue decreased by 5%
-- Gross profit increased by 7%
-- Improved net profit to Rp121 billion
-- Store rationalization programme is near completion
"The competitive retail environment is expected to remain
challenging for the Food business. In response, actions are being
taken to increase the value proposition for consumers by providing
better fresh offers, enhancing pricing strategies, and improving
supply chain efficiencies. The Non-Food businesses continue to
trade well with positive prospects."
Stephane Deutsch
President Director
Results
Audited Full Year
2016 2015 Change
------------------
Rp billion Rp billion %
------------------ ------------------ ---------------- ---------------- -------
Net Revenue* 13,678 14,353 -5
Gross Profit* 3,570 3,327 +7
Operating Profit
/ (Loss)* 206 (99) n.m.
Profit / (Loss)
for the year - Continuing* 152 (82) n.m.
- Discontinued** (32) (62) n.m.
- Total 121 (144) n.m.
Rp Rp %
------------------ ------------------ ---------------- ---------------- -------
Profit / (Loss)
per share - Continuing* 36 (20) n.m.
- Discontinued** (7) (14) n.m.
- Total 29 (34) n.m.
------------------------------------- ---------------- ---------------- -------
* Excluding Starmart operations
** Starmart operations
n.m. = not meaningful
PRESIDENT DIRECTOR'S STATEMENT
Overview
Weak consumer confidence and an increasingly competitive trading
environment continued to impact the overall performance for PT Hero
in 2016, particularly in the Food business. Sales in the Food
business were down on the prior year due to store closures and
negative like-for-like sales growth, while both Health and Beauty
and Home Furnishings reported higher sales and strong like-for-like
sales growth.
Despite the mixed sales performances, profitability in both the
Food and Non-Food businesses improved. A combination of range and
promotional strategy improvements resulted in enhanced gross
margins, and store rationalization and tighter cost management
allowed for a greater control of operating expenses.
Financial Performance
Sales in 2016 were Rp13,678 billion, 5% lower than the prior
year. Net profit from continuing operations was Rp152 billion
compared to a net loss of Rp82 billion in 2015.
The Food business saw sales decline by 7% to Rp11,700 billion as
supermarkets and hypermarkets continued to be challenged by the
rapid growth of smaller format store operators. Excluding
unallocated corporate expenses, the operating income from the Food
business improved to Rp91 billion, following the loss recorded in
the prior year, due to promotional strategy improvements and a
focus on cost management.
The Non-Food businesses produced sales up 15% at Rp1,978 billion
following double digit like-for-like sales growth in both Home
Furnishings and Health and Beauty, and despite the effect of store
closures in Guardian. Excluding unallocated corporate expenses, the
operating income contribution was significantly ahead of last year
at Rp176 billion, due to improved gross margins and the benefit of
the closure of underperforming stores.
The increased profit coupled with more selective capital
spending led to the net cash position improving to Rp183 billion at
the year end, compared with Rp47 billion in 2015.
Business Activities
The retail trading environment in 2016 was challenging for the
Food business, especially in the second half of the year following
Eid Mubarak. Competition intensified as mini-market operators
continued to invest heavily in network development, offering very
competitive pricing on daily staples. Against this backdrop, the
Food business experienced negative like-for-like sales, while also
closing selected underperforming stores. Initiatives to restore
sales growth are underway, including improving the consumer value
proposition with particular focus on delivering a better fresh
offer, enhancing the pricing and promotion strategy, and improving
supply chain efficiency through higher utilization of the Group's
distribution centre.
In Giant, in addition to improving the fresh offer, we are
reviewing the range across general merchandise to make the offer
more relevant for changing consumer needs. In Hero Supermarket,
initiatives are underway to improve both the range and shopping
experience for consumers, and we have recently opened a new model
store at Pondok Indah Mall where initial trading results are
encouraging.
In Health and Beauty, the significant store rationalization
programme in Guardian, which was announced last year, has
progressed well and is near completion. Despite these closures,
strong like-for-like growth produced higher sales in 2016, as well
as delivering higher profitability. There is a stronger focus on
ensuring the range on offer is relevant for customers, while the
health offer is being developed further to drive sustainable sales
growth.
In IKEA, there was continued strong sales growth from the Alam
Sutera store, and profits were also up on the prior year. IKEA
enjoyed higher margins, benefiting from lower product costs and
higher sales. The IKEA online sales channel covering the Greater
Jakarta area went live in the third quarter of 2016 and has been
well received by our customers. A site for a second IKEA store in
Jakarta has been identified to support future growth.
At 31(st) December 2016, the Company operated 448 stores,
comprising 55 Giant Ekstra hypermarkets, 147 Giant Ekspres and Hero
Supermarkets, 245 Guardian Health and Beauty stores and 1 IKEA
store. The net decrease of 162 stores during the year was primarily
due to the Guardian rationalization programme and the divestment of
the Starmart convenience store business.
Prospects
The competitive retail environment is expected to remain
challenging for the Food business. In response, actions are being
taken to increase the value proposition for consumers by providing
better fresh offers, enhancing pricing strategies, and improving
supply chain efficiencies. The Non-Food businesses continue to
trade well with positive prospects.
Stephane Deutsch
President Director
1(st) March 2017
- 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
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