SINGAPORE: Supermarket chain Sheng Siong said on Wednesday (Feb 24) that its full-year net profit jumped 83.7 per cent as customers stocked up and had meals at home during the COVID-19 pandemic.
Net profit for the year ended December 2020 rose to S$139.1 million from S$75.8 million the previous year, it said.
Revenue rose 40.6 per cent to S$1.4 billion, mainly driven by elevated demand arising from COVID-19.
"Demand became elevated in the first half of 2020 as consumers loaded up their pantries and dined at home when the DORSCON level changed to Orange and the circuit breaker, which restricted movements and forbade dining out was imposed," said Sheng Siong in a press release.
While that demand tapered in the second half of the year as restrictions on movements were relaxed, it was still much higher than pre-pandemic levels, Sheng Siong added.
Supermarkets saw a surge in demand for groceries and personal hygiene items after the Government in February raised its Disease Outbreak Response System Condition (DORSCON) level to Orange due to the global coronavirus outbreak.
Empty shelves and snaking queues outside supermarkets were a common sight and delivery slots were unable for weeks.
In April, Sheng Siong announced it would give its employees an additional month's salary as a token of appreciation.
An internal memo seen by TODAY last month said that Sheng Siong's employees would receive bonuses of up to 16 months, inclusive of the annual wage supplement (AWS).
As a result, administrative expenses increased by about 42 per cent last year mainly due to higher staff costs, Sheng Siong's statement showed on Wednesday. Staff costs accounted for S$67.8 million of the S$72.6 million increase in administrative expenses.
"Staff cost increased as a result of higher headcount, longer working hours, an additional month of salary paid in 2Q2020 to reward staff for their diligence, and higher provision for staff bonuses," said Sheng Siong.
"The additional headcount and longer working hours were required to cope with the increase in volume, implement the safe distancing and tracing measures relating to COVID-19 and to operate the new stores," it added.
Sheng Siong opened five new stores and closed one outlet last year, taking its total store count to 63.
Going forward, the supermarket chain said its revenue this year will depend on the COVID-19 situation, which will affect demand and the timing of the opening of new stores.
It added that it will continue to look for retail space in new and existing HDB housing estates, particularly in HDB estates where the Group has no presence.
"Competition in the supermarket industry is expected to remain keen among the brick-and-mortar and online players," said Sheng Siong.
"Although there were no major disruptions to the food supply chain in FY2020 because of COVID-19, there are still risks of disruption either because of COVID-19, weather or geopolitical events which will affect input prices," it added.
The board has proposed a final dividend of 3 cents per share. This will take its total dividend for the year to 6.5 cents per share.