Jumbo's Q2 net profit slips 1.1% to $3.4m

The group's expenses segments rose in the quarter.

Food & beverage provider Jumbo Group posted a slight decline in net profit for the past quarter, down 1.1% to $3.4m.

According to UOB Kay Hian, this is brought about by the higher expenses for the quarter. The group’s salary expenses, operating lease expenses and depreciation expense rose 5.5%, 24.5% and 29.8%, respectively.

"The group incurred higher salary expenses due to added headcount at the expanded Riverside Walk outlet, Resorts World Sentosa (RWS) bak kut teh (BKT) outlet and at its corporate headquarters," analyst Nicholas Leow said.

Meanwhile, operating lease expenses rose due to the new RWS outlet and the new corporate office whilst depreciation expenses rose in tandem with the new outlets and office.

Here's more from UOB Kay Hian:

Sales rose 6.4% yoy from S$32.7m in 2Q16 to S$34.8m in 2Q17 due to the inclusion of the new Bak Kut Teh outlet at Resorts World Sentosa (RWS), expansion of the Riverside Walk outlet in Clarke Quay and growth in the Shanghai outlets.

The group is experiencing weakness in the bak kut teh (BKT) and JPot segments due to increased competition from the myriad of competing brands. Business at the East Coast Seafood restaurant has been slow which we attribute to the new Marine Cove area at East Coast Park which was redeveloped and opened to the public in June last year.

Our channel checks at the Marine Cove area indicate that the area is crowded and well-utilised and may have cannibalised crowds from other areas in East Coast Park.