BreadTalk Group earnings halve as expansion costs bite

Expansion-related costs saw Singapore-listed BreadTalk Group’s quarterly profit more than halve despite rising sales.

According to a stock-exchange filing, net profit was down by 57.9 per cent to S$1.02 million for the June quarter, but sales rose 9.8 per cent to $163.3 million.

Besides its namesake brand of bakeries, BreadTalk’s portfolio includes Toast Box, Food Republic and The Icing Room, along with a host of franchises including Din Tai Fung, Song Fa Bak Kut Teh and Wu Pao Chun Bakery. 

Net profit for the half year was down 35.3 per cent at $2.34 on sales up 7.9 per cent to $321 million. 

The higher costs are believed to relate to expansion into the UK as well as set-up costs for new Din Tai Fung outlets. 

Sales rose in the core bakery and food-court divisions, however those gains were eroded by higher distribution and selling costs.

The bakery division, which accounts for about two thirds of BreadTalk’s sales, posted a loss over the half year on a pre-tax basis. 

This was mitigated by strong performances of the food courts, especially in Hong Kong and Mainland China, where profits rose by 23.8 per cent, thanks largely to low vacancy rates.

BreadTalk is on track to open its first Song Fa Bak Kut Teh outlet in Taiwan later this year and plans to open more eateries in Thailand and Singapore. It will also continue to roll out new food courts, focusing on Greater China and Cambodia.

“Efforts to turnaround the bakery business, particularly in China and Thailand, remain underway, while we continue to build on the strong performance of the business in Singapore,” the company said in its filing.

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