Jumbo Group net profit crashed 19.2% to $2.1m in Q1
It cited the increase in the number of outlets and expansion of the PRC corporate office.
In its recent financial statement, the revenue growth was on the back of an increase in revenue from the Group’s operations in Singapore and the People’s Republic of China, which rose by $1.3m and $1.7m, respectively. Revenue from the PRC operations in Q1 FY2018 took into account contributions from the Group’s first JUMBO Seafood restaurant in Beijing, PRC and the fourth JUMBO Seafood restaurant in Shanghai, PRC.
Cost of sales which comprised raw materials and consumables used increased by 14.0% or $1.6m, from $11.7m in Q1 FY2017 to $13.3m in Q1 FY2018, in line with the increase in revenue. Employee benefits expense increased by 12.2% or $1.2m, from $10.1m in Q1 FY2017 to $11.3m in Q1 FY2018. This was mainly due to an increase in the number of employees for the Group’s new JUMBO Seafood outlets in Shanghai and Beijing, PRC as well as an overall increase in headcount and remuneration to support its regional expansion.
Operating lease expenses increased by 8.3% or $0.2m, from $3.3m in Q1 FY2017 to $3.5m in Q1 FY2018 mainly due to the leases for the new outlets in Shanghai and Beijing, PRC, and expansion of the Group’s PRC corporate office. Depreciation expense remained stable at $1.1 million in Q1 FY2018 and Q1 FY2017.
Other operating expenses increased by 18.2% or $0.5m, from $3.0m in Q1 FY2017 to $3.5m in Q1 FY2018 mainly due to the increase in the number of outlets and expansion of the PRC corporate office, coupled with pre-operating and promotional expenses for the fourth JUMBO Seafood outlet in Shanghai, PRC, which opened in November 2017, and marketing expenses relating to the Group’s 30th Anniversary celebrations.
As a result of the above, profit attributable to owners of the Company (net profit) decreased from $2.6m in Q1 FY2017 to $2.1m in Q1 FY2018.
JUMBO Group CEO and executive director Ang Kiam Meng (黄建銘) said, “JUMBO’s operations in Singapore and the PRC have continued to perform well and our Group has made further headway in growing our overseas presence. We are excited and positive about our growth as we seek to expand our presence in existing and new markets.”
Leveraging on its four years of operational success in Shanghai, PRC, the Group intends to continue expanding the JUMBO Seafood brand to other major cities in the PRC. Outside of Singapore and the PRC, they will continue to explore franchising opportunities to diversify and grow its business offerings. In this respect, the Group recently announced its entry into Taiwan through franchising, with a local joint venture partner for its JUMBO Seafood brand.
As the Group continues to grow its core operations, human capital and rising costs will likely be some of the key challenges faced. The Group’s results for Q1 FY2018 were reflective of the pre-operating and promotional expenses for its new outlets as well as the performance of new outlets during their initial gestation period in this period of expansion.
Photo credit: Fomo Pay
