KUALA LUMPUR (May 25): OldTown Bhd's net profit for the fourth quarter slumped 46% year-on-year on weaker earnings contribution from both its café chain operations and beverage manufacturing business.

Net profit for the quarter ended March 31, 2017 (4QFY17) was down at RM9.91 million, versus RM18.36 million a year ago, though revenue registered a slight 2% uptick to RM106.96 million from RM104.52 million, supported mainly by higher topline from beverage manufacturing.

The group proposed a final single tier dividend of 1 sen per share and a special single tier dividend of 3 sen per share, bringing its full FY17 payout to 10 sen, compared to 9 sen in FY16.

OldTown told Bursa Malaysia today that its café chain operation saw a 73% y-o-y fall in profit before tax (PBT) to RM1.09 million, mainly due to a RM4.76 million provision for doubtful debts, while revenue dipped 7% to RM47.78 million.

Meanwhile, its beverage manufacturing PBT posted a 32% fall in PBT to RM11.54 million, due to higher selling and distribution expenses, though revenue grew 11% to RM59.18 million.

For the full 2017 financial year (FY17), OldTown's net profit grew 16% to RM60.77 million from RM52.27 million in the previous year, driven by the group's manufacturing of beverages, which recorded double-digit growth in both revenue and PBT.

However, the café chain operations saw a dip of 21% y-o-y in PBT to RM16 million due to lower revenue, higher staff costs, and the provision of doubtful debts.

Revenue for the year was up 8% to RM425.2 million from RM393.41 million previously, as it exported more beverages and benefited from foreign exchange gains.

Going forward, OldTown said it would focus on the opening of traditional, "generic" outlets throughout Malaysia.

"We will also be steadfast in identifying potential locations where the lower cost model (known as OldTown White Coffee Basic) remains a viable solution and a growth model," the group said, adding that it continues to receive interest from prospective franchisees.

However, weak consumer sentiment and tighter regulations are expected to adversely impact the business in Malaysia. Across the Causeway, OldTown said its strategy in Singapore would be centred on growing the "basic" concept outlets.

OldTown shares slipped 6 sen or 1.9% to RM3.09 today, continuing its decline from a record high of RM3.26 on May 19. It has a market capitalisation of RM1.43 billion.