TIDMDFI TIDMJAR TIDMJDS
RNS Number : 3667H
Dairy Farm International Hldgs Ltd
31 July 2019
To: Business Editor 31st July 2019
For immediate release
PT HERO SUPERMARKET TBK
FIRST HALF 2019 RESULTS
The following announcement was issued today by the Company's
85.8%-owned subsidiary, PT Hero Supermarket Tbk.
For further information, please contact:
Dairy Farm Management Services Limited
Kirsten Molyneux (852) 2299 1884
Sindy Wong (852) 2299 3011
Brunswick Group Limited
David Ashton (852) 3512 5063
South Tangerang, 31(st) July 2019
PT HERO SUPERMARKET TBK
FIRST HALF 2019 RESULTS
Highlights
-- Net revenue at Rp 6,673 billion, down by 2.5% following space optimisation plans
-- Profits down by Rp 26 billion, as a result of significant IKEA investment
-- Underlying improvement in Food business environment
encouraging as our transformation initiatives begin
-- Double digit growth in Sales achieved in both Health & Beauty and IKEA
-- Significant expansion of IKEA underway, investing for future growth
-- Multi-year transformation on track to improve performance in the longer term
Results
(Unaudited)
First Half
2019 2018 Change
--------------------
Rp billion Rp billion %
-------------------- ----------- ----------- -------
Net Revenue 6,673 6,846 -2.5
Gross Profit 1,835 1,825 0.5
Profit 8 34 -77
Rp Rp %
----------- -----------
Earnings per share 2 8 -75
--------------------- ----------- ----------- -------
PRESIDENT DIRECTOR'S STATEMENT
Introduction
Sales in the first half were 2.5% lower compared to the same
period last year, impacted by our space optimisation plan in
support of revitalising our Food business. Hero's Food business
benefitted from an improving trend in like-for-like sales during
the period, as well as in underlying profitability, showing signs
of early progress from the first phase of our business
transformation.
Each of our IKEA and Health & Beauty businesses delivered
strong double-digit sales growth as customers continue to respond
positively to both banners.
Financial Performance
Total sales in the first half stood at Rp 6,673 billion, 2.5%
lower compared to the same period last year, following changes made
to optimise space within the Food business. Although overall sales
were slightly lower, we have begun to benefit from an improving
trend in like-for-like sales within Food, demonstrating positive
signs of progress during the early stages of our multi-year
transformation programme.
Work has been taking place to improve our operating standards,
our instore service and our business operating model, together with
a more consistent approach in delivering price competitiveness. The
transformation remains at an early stage in its development but
progress is encouraging thus far.
Double digit sales growth was achieved in both IKEA and Guardian
stores. IKEA continues to deliver strong performance and its sales
growth was further enhanced by a growing contribution from
e-commerce following the successful relaunch late last year of the
website and the introduction of more pick-up points being added to
the network. Guardian maintained a strong market price position as
well as landing a series of successful store remodels, with greater
emphasis on Beauty categories and the addition of local Halal
certified ranges, all being well received by customers, and helping
to lift sales.
While sales growth continues to be strong, IKEA's profitability
significantly impacted the Hero Group result as we invest in the
development of new stores, incurring heavy pre-opening expenses,
given the three new stores under development. Adverse exchange
rates movements also impacted profitability but the adverse effect
on profitability is expected to moderate in the second half.
Business Activities
PT Hero remains committed to its multi-year transformation plan
to reshape and revitalise our customer offer to ensure quality and
value, as well as improve the productivity of our stores for the
benefits of our customers and our team members. Food retail in
Indonesia has seen increasing competition in recent years.
Customers are changing the way they shop, and we must adapt to
compete effectively.
As we rebalance our Food store portfolio, we will continue to
invest in opening and redeveloping stores, leading to a stronger,
more sustainable business going forward. We have launched pilot
propositions in which we are redefining space and trialing a range
of innovations in our formats. We are putting greater emphasis on
fresh food, range optimisation and, where relevant, even
repurposing the space altogether. While it remains very early days
for our store renewals, the initial customer response has been
encouraging.
Outside of Food, our other businesses in Indonesia continue to
show strong growth momentum. Guardian continues to refine its offer
to reflect customer demand, delivering good results. As mentioned
earlier, Guardian has also begun to expand space following a
successful rebalancing of the portfolio in 2017. Guardian opened 22
stores in the first half, bringing the total number of stores in
Indonesia to 280.
IKEA continues to exceed our expectations and as such, we are
seeking to invest significantly to grow the store network, as well
as the online business. E-commerce experienced more than double
digit growth during the first half, as customers responded
positively to the newly launched web offer. In addition to the
ongoing projects at Jakarta Garden City and Kota Baru Parahyangan
in Bandung, both of which are planned to open at the end of 2020,
plans are underway to convert a Giant hypermarket to an IKEA store
in Sentul. This store conversion is a good example of the breadth
of our strategic thinking when it comes to taking a holistic view
of the retail space optimisation plan.
Prospects
PT Hero remains firmly focused on its multi-year strategic
transformation and is confident that the actions currently underway
will lead to longer-term sustainable improvements. Our
transformation will take time and is at an early stage but we are
encouraged by progress. We aim to invest more than Rp 500 billion
across the Hero Group this year to create better, more relevant
retail space, an improved product offer in each of our store
formats, as well as improving operating standards for our
customers, and securing further jobs for our team members. We
remain firmly committed to being a strong competitive retailer in
each of our retail sectors and to growing our business over the
long term in Indonesia.
Patrik Lindvall
President Director
31(st) July 2019
- end -
For further information contact:
Patrik Lindvall, President Director
PT Hero Supermarket Tbk
Tel: +62-21-8378 8388
E-mail: extcomm@hero.co.id
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END
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