Despite relatively stationary sales figures, Hong Kong’s DFI Retail Group has reported robust profit growth in the first half of the fiscal year. Sharing profits with shareholders saw an impressive rise of 39 per cent to US$105 million in the six months concluding on June 30. Additionally, subsidiary profits also marked an increase by 3 per cent, reaching $75 million.
The management cites several reasons for this significant growth. Enhanced profitability in health and beauty sectors, increased contributions from associates, and steady revenue growth trends are the primary contributors to this success. For the first half of the year, subsidiary revenue totalled $4.4 billion, a marginal increase of 0.3 per cent on a comparable basis. This figure excludes the impact of the increased cigarette tax in Hong Kong and the sale of the Hero Supermarket business in Indonesia the previous year.
Total revenue, accounting for 100 per cent of associates and joint ventures, noted a 1 per cent rise to $8.2 billion. The health and beauty division experienced a 4 per cent rise in sales, highlighting the growing brand value of Mannings and Guardian.
On the other hand, the convenience segment, operating 7-Eleven stores in Hong Kong, Macau, Guangdong province, and Singapore, saw a 4 per cent revenue decline. The food division registered a slight dip in sales, not considering the sale of the Hero Supermarket.
The home furnishings division, which runs Ikea in Hong Kong, Macau, Taiwan, and Indonesia, continues to face challenges due to fierce competition and changes in consumer purchasing patterns.
“Our ongoing portfolio evolution allows us to focus resources on high-profit businesses and growth initiatives. It also provides strategic flexibility for non-organic opportunities,” remarked Group CEO Scott Price.
Despite lowering its revenue outlook for the full year, DFI has upgraded its profit guidance. Revenue growth is now anticipated to rise between 0.5-1 per cent, as opposed to the previously estimated 2 per cent. In contrast, an underlying attributable profit is expected to be within the range of $250-270 million, compared to the previously estimated $230-270 million.
The group asserts its confidence in navigating the evolving market landscape, backed by strategic initiatives designed to increase market share and profit growth across all businesses.
What was the reason for the significant profit growth?
Enhanced profitability in health and beauty sectors, higher contributions from associates, and steady revenue growth trends were the primary contributors to the growth.
How did the convenience segment perform?
The convenience segment, which operates 7-Eleven stores in various locations, reported a 4 per cent revenue decline.
What are the expectations for the full-year revenue growth and profit?
Revenue growth is now anticipated to rise between 0.5-1 per cent, while an underlying attributable profit is expected to be within the range of $250-270 million.
