SFI – Q207
All the data are extracted from the results,
- All figures in S$,000 unless otherwise stated
- FY is end-Dec
- Turnover : +$11.7 million (+7.9%)
- Overseas : +17.4% ; Singapore : -5.9%
▪ Food Distribution : -$3.6M Q-on-Q. Continued to be impacted by supply and stock issues. General suspension of chicken imports from China also had a negative impact.
▪ Food Catering : -$1.2M (-5.5%). Due to lower exports (S$0.5M) of “meals-ready-toeat” (“MRE”), compared with S$2.4M exported in 2Q 2006. Food catering sales to its key customer in Singapore were higher during the quarter.
▪ Abattoir and Hog Auction revenues were higher by $1.3M (+33.4%) due to higher number of pigs supplied and a $3 per pig slaughter fee increase from 1 April 2007.
- Overseas subsidiaries reported combined sales increase of $15.2M (+17.4).
▪ Daniels grew $6.9M (+14.0%), helped in part by a higher Sterling Pound/ Singapore dollar exchange rate. Daniels’ sales in Sterling Pound grew 10.0% for the quarter, with prepared fruit and juice/drinks registering growth rats of 14.5% and 31.8% respectively. Soup however, declined 5.8% due to a very warm April which effectively ended winter sales earlier by a month. The warmer weather prompted retailers to switch to summer merchandising early and negatively impacted on soup sales.
▪ International Cuisine Limited (“ICL”) sales grew $4.5M (+18.1%). In Sterling Pound terms, the increase was 13.9%. The increase in sales was due to promotions on certain product lines by one of ICL’s key customers and successful launches of two other product ranges for another key customer. Branded NCG ready meals were also launched towards the end of the quarter.
▪ Cresset Limited (“Cresset”) sales grew $0.2M (+3.9%) – Growth in Euro was 1.1%. While CRM sales increased $1.3M (+47.4%), sales of ambient meals were $1.1M lower.
▪ Farmhouse Fare acquired at end October last year, contributed $4.9M of sales in chilled desserts.
▪ Revenues from Australian subsidiaries were higher by $1.0M (+15.7%).
▪ Shanghai STFI (“SSTFI”) turnover declined $0.6M (-29.1%) due to the ban of chicken exports to Singapore. This follows a general suspension of imports of chicken products from China in February this year. Sales in the domestic market also declined during the quarter.
- PBT for the quarter decreased $1.0M (-10.3%).
- PBT from Singapore was lower by $1.5M (-20.8%) as a result of poor performance from Food distribution. Food Distribution profit was $2.3M lower due to lower sales and lower margins. Profit for Food Catering was lower due to lower exports of MRE packages when compared to the same quarter last year. Abattoir and Hog Auctions reported higher profits due to higher number of pigs supplied and the $3 per pig slaughter fee increase from 1 April 2007.
- PBT from overseas grew $0.5M (+17.4%).
Daniels’s profit was $0.9M (-39.0%) lower despite a 14.0% increase in sales. Higher sales (and higher profits) from prepared fruits and juice/drinks were not adequate to offset the reduced profit from lower soup sales which had the highest profit margins amongst Daniels’ core product categories.
- ICL’s profit increased $0.4M on higher sales.
- Farmhouse Fare contributed $0.2M in profits, which included a provisional charge of $0.5M for amortisation of intangibles relating to its acquisition.
- Cresset registered a loss of $2.6M for 2Q 2007, compared with a loss $1.1M for 2Q 2006. The results included $0.9M restructuring costs of the ambient business which is being phased down. Results at the operating level were also poorer as labour reductions could not be brought down fast enough in line with the lower activity levels at the ambient operations.
- Profits from Australian subsidiaries were higher by $3.3M. 2Q 2007 results included a $4.4M restructuring grant received as compensation from the Great Barrier Reef Marine Park (“GBRMP”) Authority. A $1.1M impairment loss on fishing license was recognised, as well as $0.1M gain for disposal of another fishing vessel.
- Loss from SSTFI was $1.1M, compared with a small loss for 2Q 2006. The higher losses were attributable to lower sales, and a $0.5M stock provision made during the quarter.
- Singapore Operations
- The supply situation in Food Distribution has been resolved and supplies have reverted to normal.
- Food Catering is expected to perform better in the second half of the year as the recent renewal of the UAE contract will increase sales.
- Abattoir and Auction revenues will be assisted by the $3 per pig slaughter fee increase for the full 2H2007. Barring a serious outbreak of pig diseases, the pig supply numbers is expected to stabilise at 1H 2007 numbers, which is an improvement over 2H 2006.
- Overseas Operations
- With the exception of Cresset, the UK/Europe businesses are expected to perform well in the second half year. Cresset has been restructured. The objective is to have Cresset achieve break-even in cash terms by 4Q 2007. Production for a key ambient customer (with low margins) ceased at the end of 2Q 2007. Staff reductions have continued throughout 2Q 2007. A number of initiatives are being taken that should deliver overhead cost savings to improve the situation in Cresset.
- The key performance driver will be our ability to grow our CRM volumes ahead of a fast-growing segment. SSTFI performance for 2H 2007 is expected to continue to be weak. Price increases have been effected in the domestic market at the end of 2Q2007, to help mitigate higher raw material costs and consolidation of manufacturing activities at one site should reduce overheads considerably.
- The import ban of chicken products from the Peoples’ Republic of China is not expected to be lifted soon.
- In Australia, the receipt of the GBRMPA grant has paved the way for exit from commercial fishing operations. We continue to review business options regarding the seafood processing business.
- Overall Outlook for FY 2007
- Overall, we expect better earnings for FY 2007.
Source : SGX