- Convenience store contributed RM504.9m and RM13.2m in revenue and PAT respectively to 3Q2020
• Phamaceutical (Caring) contributed RM172.2m and RM8.1m in revenue and PAT respectively to 3Q2020
• Corporate exercise expenses incurred amounts to RM5.5m
• Year to Date 3Q2020 core profit from convenient store and pharmaceutical amounted to RM37.5m and RM13.9m respectively
• The Group year to date PAT landed at RM29.8m vs RM42.7m in YTD 3Q2019.
Comments from Chief Executive Officer – Colin Harvey
Our sincere thanks to our team for their continuous contribution as their hard work and selfless dedication to the business continues to ensure 7-Eleven remains as the preferred convenience store brand in Malaysia.
We are pleased to achieve higher topline this third quarter despite the overall depressed retail market and low consumer sentiment due to the on-going pandemic coupled with continued restrictions on our operating hours and periodical public movement control orders. We are confident that the continuous implementation and improvement of our strategy roadmap in strengthening the key areas of assortment, supply chain, operational excellence, store base and digitally enabling the organization as well as synergistic opportunities with our strategic acquisition of Caring Pharmacy will continue to deliver positive returns and ensure that the Group maintains it positive trajectory.
Review of Current Quarter Performance versus Corresponding Quarter Last Year
The group’s performance in the current quarter was affected by the Covid-19 pandemic. Our operations and stores operating hours are restricted during Conditional Movement Control Order (“CMCO”) which was in effect from 4 May 2020. Subsequently on 7 June, 2020 the Malaysian Government announced the Recovery Movement Control Order (“RMCO”) which eased restrictions and allowed interstate travels.
Convenience Stores Segment
Revenue from convenience stores declined by RM89.2m or 15.0%. Most product categories recorded lower revenue resulting in lower gross profits.
Operating expenses improved for the current quarter by RM28.7m or 15.2% due to lower wages from hiring freeze, lower utilities, maintenance, and rents. Excluding expenses incurred in the corporate exercise, the convenience store segment recorded a core Profit After Tax of RM13.2m.
Corporate exercise expenses which is primarily professional fees, interest to finance the acquisition of Caring Group and share of losses in the associate amounts to RM5.5m for the quarter.
Caring Group contributed a Revenue and Profit After Tax of RM172.2m and RM8.1m respectively in the current quarter.
The Group’s consolidated Profit after tax for the current quarter after taking into consideration the corporate exercise expenses stands at RM15.8m.
Review of 9 Months Period Performance versus Corresponding Period Last Year
Revenue from the convenience stores declined by RM131.8m or 7.5%, primarily driven by lower sales in Q2 and Q3 as a result of MCO and CMCO. Excluding expenses incurred in the corporate exercise, the convenience store segment recorded a core Profit After Tax of RM37.5m.
Corporate exercise expenses incurred for 9 month ended 30 September 2020 amounts to RM21.6m.
In the pharmaceutical segment, Caring Group contributed a Revenue and Profit After Tax of RM311.3m and RM13.9m respectively for the 6 months ended 30 September 2020.
The Group’s consolidated Profit After Tax for the 9 months ended 30 September 2020 after taking into consideration the corporate exercise expenses is reported at RM29.8m.
In view of the current trading condition under CMCO in major states, the Group is taking a cautious view over the outlook for the last quarter of 2020 due to the persevering effects of COVID-19 and the measures necessary to control the pandemic. Nevertheless, the Group will continue to explore opportunities for growth in other channels and innovate in our product offerings. We will also continue to focus on our customer’s needs, pursuing our core strategy pillars of Operational Excellence, Cost Management and Commercial
Innovation, at the same time refreshing the 7-Eleven and Caring brand in the mind of customers though refreshed stores, innovations in our pricing, promotions, and developing exciting products.