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18 March 2004

 
Dairy Farm registers fifth year of growth in Asia

Dairy Farm Group has achieved positive performances in 2003 with good financial results in most of its markets, according to its latest financial report released in late February.

The group delivered a solid performance in South Asia, where it completed acquisitions in three countries as well as delivered a 48% improvement in ‘profit before interest and tax (PBIT)’ and a 24% increase in sales. These figures represented a double-digit growth for the fifth consecutive year.

The acquisitions included Tops supermarket chain - 22 in Indonesia to be renamed Hero Supermarkets as well as 32 in Malaysia to be re-branded as Giant and Cold Storage supermarkets. These new additions effectively helped Diary Farm expand its presence to East Malaysia and Indonesia’s regional cities like Bandung and Surabaya. The acquisition of 34 Shop N Save supermarkets in Singapore also helped Dairy Farm increase its customer base to more public housing estates.

“Shop N Save is an established brand name with loyal clientele. We intend to retain and build on the Shop N Save brand, and we will focus on its smooth integration with our Cold Storage supermarket business early this year,” said Michael Kok, regional director, Dairy Farm South Asia.

Meanwhile, Singapore’s Cold Storage continued to register higher sales and better margins with competitive pricing, good cost control and the introduction of its additional house label offerings.

The increased consumer demand for pharmaceutical, healthcare products and fresh food brought about by the SARS outbreak during the second quarter last year also generated increased sales for Cold Storage, Giant and Guardian health and beauty stores in the republic.

At the same time, Dairy Farm South Asia has invested more than US$21 million to open 127 new stores in the region. In Singapore, Giant opened its fourth store in December while convenience store chain 7-Eleven expanded with 35 stores. Guardian also increased its store numbers in Malaysia by 27 to 123 this year.

Although in India, Diary Farm’s joint ventures, Foodworld supermarkets as well as Health and Glow health and beauty stores are making losses, their operating performances have improved following measures to streamline operations and to boost sales.

As at end December 2003, the group had 2,570 outlets including 956 stores in South Asia under its operations, with total sales reaching US$4.5 billion.

In the context of North Asia, profits and sales grew by 65% and 13% respectively in 2003. Wellcome Hong Kong has improved with clear business strategies and tight costs control by opening four stores, closing eight and completing 29 major refurbishments, said the group.

While Mannings continued to deliver excellent customer service by winning the ‘Hong Kong’s Retailer of the Year’ award for the fourth consecutive year, IKEA – Diary Farm’s home furnishings business in Hong Kong and Taiwan -- looked set to establish a network of larger, more modern stores with a new site in Kowloon and additional space for the Hong Kong Island store.

However, Diary Farm’s food retail business in Hong Kong had mixed results. Although Starbucks expanded with eight new outlets in Hong Kong, annual profits for Maxim’s fell by 31% compared to 2002.

Meanwhile, Wellcome Taiwan shone as the only Dairy Farm retailer in the North Asia region making acquisitions by taking over 22 Kayo stores and eight Sunmart supermarkets. Dairy Farm also established 11 new stores including Jasons Market Place in Taiwan. Elsewhere in the region, Dairy Farm’s 7-Eleven chain expanded further in China with 31 new stores in Guangdong and Shenzhen to reach 150 outlets, while Olive Young, the group’s 50%-owned associate continued to penetrate into South Korea’s health and beauty market with seven new stores opened for 2003.

Diary Farm will continue with its plan for steady organic growth, entry to new markets and further bolt-on acquisitions in existing markets in all its banners across its regional operations.

“With strong financials and focused operations, Diary Farm is well placed for further growth in Asia during 2004,” said Simon Keswick, chairman of Diary Farm International Holdings.

 


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