Dairy Farm

• Underlying profit of US$276 million, down 14%
• Substantial sales and profit growth in Grocery Retail
• Solid trading in Home Furnishings
• Health and Beauty, Convenience and Maxim’s significantly impacted by COVID-19

Dairy Farm’s underlying profit for the year was US$276 million, 14% lower than last year.

Grocery Retail

There was a good performance by Grocery Retail, which saw higher contributions from Hong Kong, Singapore, Malaysia and Taiwan. Profit growth was driven by the benefits realised from improvement programmes, strong like-for-like sales growth and government support. The performance of the business in Indonesia was significantly impacted by pandemic-related movement restrictions, which reduced hypermarket custom.

Home Furnishings

IKEA delivered good profit growth, mainly in Hong Kong and Taiwan, with new store openings and strong e-commerce growth offsetting pandemic-related disruptions. The business also benefitted from lower cost of goods, strong cost controls, reduced pre-opening expenses and government support. IKEA has a strong development pipeline, with two new stores to open in 2021.

Health and Beauty

There was a significantly lower contribution from Dairy Farm’s Health and Beauty business, with Mannings in North Asia severely impacted by low tourist traffic. The business has implemented price investment and cost management initiatives in order to address the challenges it faces.

Convenience

The group’s Convenience business saw profits reduced by lower sales and a sales mix shift to lower margin products.

Associates

The performance of 50%-owned Maxim’s was badly impacted by pandemic-related restrictions, which led to reduced visits to stores and some store closures.

Dairy Farm’s 20.1%-owned associate Yonghui performed well, with strong sales and profit growth in the first half.

The launch of the yuu rewards programme at the end of July 2020 represents a critical milestone in driving Dairy Farm’s modernisation and digital transformation. yuu will support a more customer-centric approach across all the Dairy Farm banners and drive an enhanced level of customer engagement.

During the period, Dairy Farm also launched Meadows, its new own-brand offering, in Hong Kong, Singapore and Malaysia. Over 600 items have already been launched across banners and markets at lower prices. There has been a very positive reaction from customers. The future growth of the group’s own-brand offering will allow it to leverage scale and help it to gain competitive advantage.

Dairy Farm’s multi-year transformation programme to reshape and reorganise the business, adapting to the changing needs of customers, continued to gain momentum during 2020. Opportunities continue to be unlocked across the group as the business seeks to leverage its scale effectively and develop a more coherent approach to improving its customer proposition, both by banner and at a country level. The group’s space optimisation plan, new store formats and improvement programmes generated greater efficiencies and delivered tangible benefits in the year.