Lower sales, higher operating costs drag down Aeon's 2Q results

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KUALA LUMPUR (Aug 27): Aeon Co (M) Bhd, which operates the Aeon and MaxValue retail stores and Aeon Big hypermarkets and supermarkets in Malaysia, saw its net profit for the second quarter ended June 30, 2015 (2QFY15) fall 66.6% to RM15.66 million or 1.12 sen per share from RM46.96 million or 3.34 sen per share a year ago. 

The Japanese retailer attributed the weaker earnings to lower sales, higher operating costs and interest expenses and the results of 2QFY14 had included a RM14.2 million gain on disposal of an 18.18% stake of the land and building of Aeon Taman Universiti Shopping Centre. 

Revenue for the current quarter came in 5.4% lower at RM811.1 million from RM857.72 million in 2QFY14 mainly due to weaker consumer spending after the implementation of the goods and services tax in April. 

In a filing with Bursa Malaysia today, Aeon said revenue from retail business segment dropped 7.8% year-on-year to RM677.1 million in 2QFY15 as a result of the softer consumer sentiments post-GST implementation. 

For the six months period (1HFY15), Aeon saw its net profit fall 30.7% to RM65.06 million from RM93.83 million in 1HFY14 due to same reasons. 

This is despite revenue for the first half rising 6.4% to RM1.92 billion from RM1.8 billion in 1HFY14, underpinned by the contributions from its new stores. 

Aeon said the economic and business environment in the second half will remain challenging with the dampened consumer sentiment as a result of higher cost of living and impact from GST implementation. 

"The group will continue to deploy strategic marketing promotions including brand loyalty activities together with cost efficiency efforts to deliver a satisfactory performance in 2015," it added. 

Shares in Aeon (fundamental:1.75; valuation: 0.5) closed one sen or 0.36% lower at RM2.79 today, bringing a market capitalisation of RM3.92 billion. 

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)