Sheng Siong profit climbs but management tempers expectations
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Listed Singaporean supermarket chain Sheng Siong’s profit soared 54.4 percent in the third quarter to US$23.27 million, riding a wave of increased sales in the grocery sector.
Revenue jumped 28.9 percent to $239.5 million, while gross profit grew 28.7 percent to $64.68 million, largely off the back of increased home cooking and stocking of pantries throughout, and beyond, the country’s Circuit Breaker period.
However, with stay-at-home orders easing across Sheng Siong’s markets, this elevated demand is likely to begin to stabilize in the following months, said CEO Lim Hock Chee.
“Competition in the supermarket industry is expected to remain keen and challenging among the traditional brick and mortar operations and e-commerce platforms, which have gained a larger share since the onset of Covid-19,” Chee said.
“The risks to supply chain disruption because of Covid-19 and other natural disasters are still there and may lead to higher input prices.”
Questions & Answers
Q.What were the key financial results for Sheng Siong in the third quarter?
What were the key financial results for Sheng Siong in the third quarter?
Sheng Siong's profit increased by 54.4 percent to US$23.27 million, with revenue growing 28.9 percent to $239.5 million. Gross profit also rose 28.7 percent to $64.68 million during this period.
Q.What factors contributed to the supermarket chain's improved performance?
What factors contributed to the supermarket chain's improved performance?
The increased profit and revenue were largely due to a rise in home cooking and pantry stocking. This elevated demand occurred throughout, and beyond, the country’s Circuit Breaker period, boosting sales in the grocery sector.
Q.What challenges does Sheng Siong's CEO foresee for the company and the supermarket industry?
What challenges does Sheng Siong's CEO foresee for the company and the supermarket industry?
CEO Lim Hock Chee expects competition to remain keen between brick and mortar stores and e-commerce platforms. He also highlighted ongoing risks of supply chain disruption and potential higher input prices due to Covid-19 and natural disasters.
Q.Why does management expect demand to stabilise in the coming months?
Why does management expect demand to stabilise in the coming months?
Management anticipates demand will stabilise because stay-at-home orders are easing across Sheng Siong’s markets. This suggests the elevated consumption seen during the Circuit Breaker period is unlikely to continue at the same rate.
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