REG - DFI Retail Group Jardine Matheson Hdg - INTERIM MANAGEMENT STATEMENT

DFI Retail groupAnnouncement

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RNS Number : 2302J  DFI Retail Group Holdings Ltd  19 May 2025

Announcement

 

The following announcement was issued today to a Regulatory Information
Service approved by the Financial Conduct Authority in the United Kingdom.

 

DFI RETAIL GROUP HOLDINGS LIMITED

Interim Management Statement

 

19 May 2025 - DFI Retail Group Holdings Limited today issues its Interim
Management Statement for the first quarter of 2025.

 

OVERVIEW

Overall macroeconomic conditions continue to evolve across the globe with
rising uncertainty caused by geopolitical tensions. Guided by its purpose
statement, the Group remains steadfast in its commitment to providing
consumers with a stable supply of quality products and great value across its
operating markets. The Group is closely monitoring consumer sentiment as the
implications of the latest tariff development continue to unfold. While the
situation remains fluid, the Group sees a manageable impact given that most
procurement is done close to consumption, with U.S. imports representing less
than 2% of underlying subsidiary sales in 2024. With enhanced sourcing
capability and agile supply chain management, the Group is confident in its
ability to navigate changing consumer behaviours and sentiment amidst
macroeconomic headwinds.

 

For the first quarter of 2025, the Group's underlying subsidiary sales,
excluding the impact of cigarette tax and the divestment of the Hero
Supermarket business in Indonesia, were 1% below the same period in 2024 and
stable on a like-for-like (LFL) basis. Strong sales performance in the Health
and Beauty segment was offset by lower contributions from other divisions.
Within its home market of Hong Kong, the Group continued to demonstrate
resilience against a challenging retail backdrop, with reported and LFL sales
down by approximately 2% year-on-year, or stable when excluding the impact of
cigarette tax. While cross-border travel continues, growth has slowed
noticeably in the first quarter. Underlying profit, excluding divestments,
increased by 28% year-on-year for the first quarter of 2025. However, after
accounting for the divestment of Yonghui, which contributed US$23 million in
earnings in the prior comparable period, underlying profit declined 18%
year-on-year.

 

The Group continues to evolve its portfolio to deliver long-term shareholder
value by focusing capital on high-growth, high-margin businesses. This
includes the recently announced divestment of the Singapore Food business. In
February 2025, the Group completed the divestment of Yonghui stake, with net
proceeds redeployed in a US$617 million debt payment, resulting in a net cash
position of US$127 million at 31 March 2025, compared to US$468 million net
debt at 31 December 2024.

 

OPERATING PERFORMANCE

Subsidiaries

LFL sales for the Health and Beauty division in the first quarter were up 4%
year-on-year, with all operating markets reporting positive LFL sales growth.
Mannings Hong Kong's performance was supported by increased basket size due to
effective promotional campaigns. Guardian continued to deliver strong LFL
performance across key markets, partly due to the timing of Raya Festive
sales. Indonesia, in particular, achieved double-digit growth in both LFL
sales and profit. Guardian Malaysia introduced its loyalty programme in March,
with 1.4 million members within the first month of launch. Improved
operational efficiency contributed to a 10% growth in overall Health and
Beauty profit.

 

LFL sales for the Convenience division declined 6% year-on-year due to lower
cigarette sales following a tax increase in Hong Kong beginning in late
February 2024. Overall, non-cigarette LFL sales were down 2% compared to the
first quarter of 2024. The Group expects mitigating sales impact from reduced
cigarette volumes upon annualisation of the tax effect and continued growth in
higher-margin ready-to-eat (RTE) businesses. LFL sales for Macau, Southern
China and Singapore were slightly behind the same period of last year. The
team remains focused on expanding its product range and enhancing its
omnichannel shopping experience, including the launch of a new 7-Eleven app in
Singapore in February. Despite a favourable sales mix shift towards
higher-margin RTE products, profit for the division declined year-on-year due
to lower reported sales as a result of cigarette tax impact.

 

The Food division reported LFL sales marginally below the first quarter of
2024. Despite consumers' pivot to value, Hong Kong LFL sales remained largely
stable year-on-year, benefiting from increased traffic and growing omnichannel
sales. In line with the Group's expectation, cross-border travel into the
Chinese mainland showed early signs of stabilisation with moderating
year-on-year growth in the first quarter of 2025. Overall, Food profit
increased by approximately 14% year-on-year, supported by improved
profitability in Singapore Food.

 

While LFL sales of Home Furnishings remained challenged due to intense
competition and basket mix change, the division reported a significant
recovery in underlying profit, helped by effective cost control measures
across markets. Similar to the Food format, the IKEA Hong Kong business is
strengthening its value-driven omni-channel proposition to compete better with
Chinese mainland digital players. In Indonesia, the IKEA team remains focused
on driving sales through expanded digital channels and a more effective
marketing strategy. The Group believes that IKEA remains well-positioned to
capitalise on a recovery in demand for home furnishings when market conditions
improve, given its strong brand equity and commitment to consumer protection
and product safety.

 

The Group continues to expand its digital presence. Daily e-commerce order
volume reached 86,500, representing an increase of over 70% year-on-year, with
improving profit contributions. Retail Media continues to build momentum, with
over 60 targeted advertising campaigns completed during the quarter, compared
to 101 for the full year of 2024.

 

Associates

Maxim's, the Group's 50%-owned associate, reported a substantial recovery in
profit contribution due to cost optimisation. Sales were stable year-on-year
with strong growth in Southeast Asia offset by weaker restaurant performance
on the Chinese mainland and store closures in Hong Kong.

 

Robinsons Retail reported 3% LFL sales growth driven by the Food, Drugstore
and Department Store segments. The reported profit dropped 85% year-on-year
due to a one-time gain from the Bank of the Philippine Island and Robinsons
Bank merger booked early last year.

 

The divestment of the Group's stake in Yonghui was completed in February 2025.

 

RECENT BUSINESS DEVELOPMENT

On 24 March 2025, the Group announced that it had entered into a definitive
agreement with Macrovalue, a leading Southeast Asian retail group, with
respect to the divestment of its Singapore Food business, which includes the
Cold Storage, CS Fresh, Jason's Deli and Giant brands, for a total cash
consideration of SGD125 million or approximately US$93 million, subject to
adjustments. The transaction aligns with the Group's strategic and capital
allocation framework, further strengthening the Group's balance sheet while
focusing capital to drive the growth of subsidiary businesses across its
markets including Guardian and 7-Eleven in Singapore. The transaction is
subject to customary closing conditions and is expected to be completed by the
end of 2025.

 

OUTLOOK

The Group remains focused on executing its strategic framework to grow market
share across all formats through a stronger value proposition, expanding
omnichannel presence and accelerating monetisation of yuu. The Group will
review the use of divestment proceeds to ensure alignment with its capital
allocation priorities. The Group maintains its full-year guidance of
underlying profit attributable to shareholders between US$230 million and
US$270 million, supported by an organic revenue growth of approximately 2%.
 

 

***

DFI Retail Group (the 'Group') is a leading Asian retailer, driven by its
purpose to 'Sustainably Serve Asia for Generations with Everyday Moments'. As
at 31 December 2024, the Group, its associates and joint ventures operated
over 10,700 outlets, of which more than 5,000 stores were operated by
subsidiaries. The Group, together with associates and joint ventures, employed
over 190,000 people, with over 45,000 employed by subsidiaries. The Group had
total annual revenue in 2024 of US$24.9 billion and reported revenue of US$8.9
billion.

 

The Group is dedicated to delivering quality, value and service to Asian
consumers through a compelling retail experience supported by an extensive
store network and highly efficient supply chains.

 

The Group, including associates and joint ventures, operates a portfolio of
well-known brands across six key divisions: health and beauty, convenience,
food, home furnishings, restaurants and other retailing.

 

The Group's parent company, DFI Retail Group Holdings Limited, is incorporated
in Bermuda and has a primary listing in the equity shares (transition)
category of the London Stock Exchange, with secondary listings in Bermuda and
Singapore. The Group's businesses are managed from Hong Kong. DFI Retail Group
is a member of the Jardine Matheson Group.

 

 

- end -

 

For further information, please contact:

 

 Karen Chan (Investor Relations)                         (852) 2299 1380
 Christine Chung (Corporate Communications and Affairs)  (852) 2299 1056

 William Brocklehurst (Brunswick Group Limited)          (852) 5685 9881

 

This and other Group announcements can be accessed via the DFI Retail Group
corporate website at www.DFIretailgroup.com.

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