DFI Retail Group

• Substantial sequential improvement in underlying profitability in second half
• Lower full year underlying profit due to continuing impact of pandemic, inflationary pressure, increased investment in digital
• Ongoing transformation programme continues to drive improvement
• Final dividend of US¢2.00 per share

2022 was another very challenging year for DFI Retail. A combination of inflationary pressures and customer behavioural shifts driven by the pandemic significantly impacted first-half financial performance, reducing profit contributions from the Grocery Retail and Convenience divisions. The group’s share of underlying losses from similarly affected associates also materially affected results.

There was, however, a significant improvement in profitability in the second half of the year. The group needs to continue to adapt to changes in consumer preferences and, despite the external challenges, has increased investments in digital capacity and capability in the year. While these investments impacted profitability in the year, they are necessary to meet customers’ evolving needs and to drive long-term shareholder value.

The group reported an overall underlying profit of US$29 million for the full year. The group’s subsidiaries delivered underlying profit of US$64 million, while associates contributed an underlying loss of US$35 million. There was an encouraging improvement in second-half underlying profit to US$80 million, representing a US$132 million increase in profitability relative to the first half.

The group’s net loss for the year was US$115 million, reflecting an impairment charge of US$171 million in respect of its investment in Robinsons Retail.

Food – Grocery Retail

Underlying operating profit for the Grocery Retail division was US$91 million for the year, lower than the prior year, primarily due to the absence of the panic buying seen last year, further compounded by rising cost of goods sold and increases in operating expenses. Despite the challenges faced throughout 2022, however, the group has been encouraged by stronger underlying performance, with Grocery Retail underlying profitability significantly above 2019 levels, supported by the group’s transformation initiatives.

Food – Convenience

Convenience underlying operating profit was US$51 million for the year, broadly in line with the prior year. Encouragingly, profitability in the second half improved significantly, with the group reporting US$51 million profit compared to the breakeven result in the first half.

Health and Beauty

Underlying operating profit for the Health and Beauty division increased by 66% to US$94 million, driven by solid sales growth.

Home Furnishings

IKEA’s sales for the year were impacted by COVID-19 related restrictions in the first half and supply chain constraints, which impacted stock availability. Operating profit was US$46 million, slightly ahead of the prior year, primarily due to strong cost control.

Associates

The performance of Maxim’s for the full year was severely hampered by a very challenging first quarter as result of the fifth wave of COVID-19 in Hong Kong, which led to a large number of restrictions on movement and dining. The group’s share of Maxim’s underlying losses was US$26 million in the first half of the year. Encouragingly, Maxim’s performance improved as the year progressed, due to solid mooncake sales performance and the easing of dining restrictions. The group’s overall share of Maxim’s underlying profits was US$38 million for the full year.

The group’s share of Yonghui’s underlying losses was US$80 million for the year, compared to a US$90 million share of underlying losses in the prior year. While Yonghui’s like-for-like sales improved in the first half of the year, performance in the second half was impacted by government-imposed restrictions on the Chinese mainland, as well as the slowdown in the overall macroeconomic environment.

Robinsons Retail reported strong growth in 2022, as it benefitted from the reopening of the Philippines economy, together with an improved product mix and strong cost control. Robinsons Retail’s underlying profit contribution to the group was US$24 million in 2022, over 60% higher than in 2021.