BreadTalk reports 52.4% higher earnings of $1.7 mil on higher revenue

Singapore (May 7): BreadTalk Group has announce earnings of $1.7 million for 1Q19, up 52.4% from $1.1 million in earnings a year ago on higher revenue.

Revenue for the quarter rose 6.1% to $157.6 million from $148.5 million a year ago, led by growth across all business divisions. The group attributes this to its continual focus on improving the quality of its products as well as the overall efficiencies in the central kitchen and procurement efforts.

Bakery division revenue rose 2.3% on-year to $72 million with the consolidation of revenue from the Thailand Bakery business following the acquisition of a 50% interest in BTM (Thailand) from Minor Food Group – excluding which the division’s revenue would have fallen 5.7% y-o-y.

Meanwhile, revenue from the Food Atrium division rose 3.1% y-o-y to $38.6 million due to the opening of a new direct operated restaurant (DOR) in Shanghai under the ‘Sergeant Kitchen’ brand. In China, the group says same store sales growth (SSG) remained generally strong across the portfolio with low stall vacancy.

Restaurant division revenue rose 9.8% on-year to $40.5 million with a full quarter’s contribution from the group’s first Din Tai Fung outlet in London as well as the CentralPlaza Pinklao outlet in Bangkok, which both opened in Dec 2018.

SSG for the Singapore operations came in at a high-single-digit percentage which BreadTalk deems to signify the underlying strength of the Din Tai Fung brand among consumers

4orth Division delivered a revenue of $5.5 million, near-doubling from $2.7 milliona year ago with the commencement of the Song Fa Bak Kut Teh operations in Beijing and Bangkok, although this has also contributed to start-up costs leading to an EBITDA loss. On a standalone basis, the group says Sō Ramen has been contributing positive net profit to the division.

Overall interest expense grew 136.2% on-year to $5.9 million due to the adoption of SFRS (I) 16 accounting standard, which also led to a 338.2% higher depreciation and amortisation expense of $38.1 million for the quarter.

1Q also saw the disposal and de-recognition of the group’s entire interest in loss-making business Carl Karcher Enterprises (Cayman), otherwise known as the Carl’s Jr business in China, bringing down its losses from share of results of associates to $0.05 million compared to $0.3 million a year ago.

As at end-March, cash and cash equivalents stood at $151.2 million as opposed to $210.6 million in the same period last year.

Looking ahead, BreadTalk says it anticipates organic growth momentum from penetration in both new and existing markets like Mainland China, Hong Kong, Taiwan and Cambodia.

Plans are also underway to deliver the second Din Tai Fung restaurant in London as the group remains focused on new outlets pipeline in Singapore and Thailand. It also continues to expand with the opening of more Song Fa Ba Kut the outlets at the 4orth division.

As for its Bakery business, the group notes positive outcomes from its efforts to turn it around.

Shares in BreadTalk closed 1.76% lower at 84 cents on Monday.