Dairy Farm’s net profit slumped 14% to $265m in H1

Weak ASEAN markets are to blame.

Dairy Farm reported that its net profit slumped 14% year-on-year to $265m (USD 193m) in the first half of the year, on back of persistently weak consumer sentiment in its core ASEAN markets.

According to RHB Research, Dairy Farm’s weakest markets included Malaysia and Indonesia, which together account for around a quarter of the group’s revenue.

“Margin erosion was felt most keenly in Malaysia after the goods and services tax (GST) implementation, while the Indonesian operations continued to underperform. In Singapore, the 7-Eleven business continues to face pressure from the supermarkets which have implemented 24-hour operations,” said RHB.

The group’s weak results were further exacerbated by currency weakness, particularly from the Malaysian ringgit and the Indonesian rupiah.

"We believe margin pressures were exacerbated by weaker regional currencies during the period. We expect this situation to persist, judging by the further weakness into August, particularly for the MYR and IDR,” said RHB.