BreadTalk profits slide 10.3% to $12.2m in FY14

Sales were weaker-than-expected.

BreadTalk closed the year with a disappointing last quarter, with declining sales across markets, especially Mainland China.

According to a report by OCBC,FY14 revenue was up just 9.9% to S$589.6m as compared to an average growth rate of ~20% over the past five years.

Although the group saw higher ‘other income’ growth of 48.6% to S$17.5m, consisting of a gain on sale of assets to the new JV in Thailand and increase in management fee income from food court operations, the group faced greater expenses as well, resulting in a 10.3% decline in PATMI to S$12.2m. A final DPS of 1 S-cents was declared, bringing total DPS to 1.5 S-cents, which is lower than FY13 DPS of 1.8 S-cents.

Here’s more from OCBC:

With 80 stores added to reach a current total of 817 Bakery outlets, the group’s Bakery division gained 8.4% in revenue while PATMI fell 36.9%, mainly attributable to higher rental and labour costs amid the gestation period. Din Tai Fung (DTF) in Singapore continued to drive the Restaurant division’s revenue up by 12.5% while PATMI only had a marginal change due to operating losses incurred from its Ramen

As the group only holds franchise agreement to open DTF in Singapore and Thailand, we could see a similar showing going forward, as opportunities for store openings become limited. We think there is better potential for its Food Atrium division, which grew 15.2% in revenue and 12.9% in PATMI on the back of its stores in Hong Kong and Singapore. Food atrium outlets increased from 58 to 63 as of Dec-14.