Published March 6, 2009

Dairy Farm 2008 profit up 29% at US$333m

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DAIRY Farm International Holdings, a pan-Asian retail group and part of the Jardine group, saw net profit rise 29 per cent to US$333 million in 2008 from a year ago.

Retail strategy: Dairy Farm will target Asia's consumer markets

Total sales increased 13 per cent to US$7.7 billion, while earnings per share came to 24.73 US cents, up 29 per cent from the previous period.

'Dairy Farm achieved further good results in 2008, with growth in both sales and profit. Trading conditions were generally favourable in the group's major markets in the first half of the year, although there were signs of some slowing in the second half as consumer sentiment was adversely affected by deteriorating global economic conditions,' the group said.

Sales, including 100 per cent of associates, increased by 13 per cent to US$7.7 billion in 2008.

The net profit of US$333 million included non-trading gains of US$13 million arising from asset disposals.

Overall, its financial position remains sound, the group said, with strong cash generation leading to the effective elimination of net gearing at the year end and ensuring that adequate funds are available for expansion.

Capital expenditure during the year within the group's businesses amounted to US$257 million.

The group is proposing a final dividend of 10 US cents per share, bringing the total dividends for 2008 to 14 US cents per share, a 22 per cent increase over the prior year.

Dairy Farm said that it continued its strategy of building leading retail businesses that meet the needs of Asia's growing consumer markets.

'The consistent implementation of this strategy has seen operations expand to seven countries in up to six major formats. In 2008, these operations continued to make good progress, with 500 net new store openings across all formats,' it said.

In larger format stores, Dairy Farm operated a total of 78 Giant hypermarkets at the year end, with 44 in Malaysia, 26 in Indonesia, seven in Singapore and one in Brunei.

In Singapore, the group's growth was led by the Cold Storage and Shop N Save supermarkets and by 7-Eleven, while Giant hypermarkets also performed better following a difficult year in 2007. Guardian, however, was hampered by a shortage of pharmacists, it said.

The group's operations in North Asia performed well. The Hong Kong businesses - Wellcome, Mannings, 7-Eleven and Ikea - each reported improved results, while there were increased contributions from 7-Eleven and Mannings in Macau.

In Taiwan, Wellcome produced better profit in a highly competitive market as it continued to develop smaller-format fresh stores. Ikea Taiwan's underlying performance improved considerably over the prior year, although further progress is still required to reach an acceptable level of return.

While the immediate economic outlook remains uncertain, Dairy Farm said that its retail businesses have established leading positions in their market sectors and are generally trading well.

'With a secure financial base, we will continue to invest in the long-term growth of the group,' it said.