SINGAPORE (THE BUSINESS TIMES) – Supermarket operator Sheng Siong on Monday (April 26) posted a net profit of $30.9 million for its first quarter ended March 31, a rise of 6.5 per cent from the $29 million recorded the preceding year.

The group’s revenue for the quarter also rose, by 2.7 per cent year on year, from $328.7 million in Q1 FY20 to $337.5 million in Q1 FY21.

Sheng Siong noted that the slight increase in revenue for the quarter was “contributed entirely” by revenue growth in new stores that opened last year. A total of five new stores were opened in FY2020.

Additionally, comparable same store sale was flat due to the high base in Q1 FY20, it added in its business update.

“Comparable same store sale was flat year on year due to a high base effect resulting from an elevated demand in Q1 FY20 caused by Covid-19,” it added.

Nonetheless, gross profit outpaced revenue growth for the quarter, rising 4.9 per cent year on year to $93.1 million. This was on the back of a 0.6 percentage-point improvement in gross margins, from 27 per cent in Q1 FY20 to 27.6 per cent in Q1 FY21.

Sheng Siong attributed this mainly to lower input prices. Meanwhile, sales mix of fresh to non-fresh produce remained largely the same in Q1 FY21, compared with the corresponding period last year.

Earnings per share for the quarter rose 9.9 per cent year on year, from 1.9 Singapore cents the previous year to 2.1 Singapore cents.

For the quarter, administrative expenses of Sheng Siong also increased by $1.8 million year on year to $55.9 million. Of this increase, $1.5 million was due to higher staff costs from additional headcount needed to man the three new stores opened after Q1 FY20, noted the group.

The group received $1.86 million in government grants in Q1 FY21, compared with $1.59 million in the corresponding period last year. The grants were from various government agencies under the Wage Credit, Special Employment Credit schemes and Covid-19-related grants; the increase came mainly from the Wage Credit Scheme.

With a net cash of $17.5 million generated for the quarter, the group’s cash and cash equivalent balance was $271.5 million as at the end of Q1 FY21.

While Sheng Siong was unsuccessful in its tender submitted last November for two shops, chief executive Lim Hock Chee said in the business update that there could be a tender for a new shop soon, as the construction of apartments and commercial space – delayed due to the pandemic – have been completed.

He added that the group will continue to look for retail space in areas “where our potential customers reside but where we do not have a presence”.

Looking ahead, Mr Lim noted that competition is likely to remain keen among the brick-and-mortar, as well as online players. “Even though the food supply chain was not seriously disrupted because of Covid-19, there are still risks of disruptions because of weather, geopolitical developments or breakdown in international carriage.”

Over the immediate horizon, Sheng Siong also expects revenue in Q2 FY21 to be lower than in Q2 FY20, as elevated demand had peaked in the second quarter last year, with the group reporting a record revenue of $418.7 million.

Shares of Sheng Siong ended Monday up $0.01 or 0.65 per cent at $1.56, prior to the results announcement.