Fairwood slips as profit slides 19pc to $52m

Shares of Fairwood (0052) fell around 2 percent after the restaurant operator posted a 19 percent drop in its interim net profit to HK$52.5 million for the six months ended September.

The basic earnings per share were 40.52 HK cents and it declared an interim dividend of 25 HK cents, down 16.7 percent from an earlier year.

Excluding the government grants, the employment support scheme and the impairment losses on its equipment and properties, profit for the period was HK$54.9 million, from a loss of HK$30.3 million for the same period last year.

Its revenue for the period grew by 16.4 percent to nearly HK$1.5 billion but the gross profit margin edged down by 2.8 percentage points to 10.5 percent.

By end of September, Fairwood had a total of 155 stores in Hong Kong, including 143 fast food stores and 12 specialty restaurants. In the mainland, the company was operating 17 stores as of September 30. The company plans to open four or five new stores in Hong Kong by early 2022, with six to seven stores scheduled for opening later in the year for its mainland business.

Rising food costs and staff shortages represent some of its biggest challenges going forward and it will continue to negotiate lower rentals while also enhancing efficiencies in its operations, the company said. The increasing takeaway sales are also opening up options for better utilizing the physical floor space, especially in its larger restaurants, it added.

Another Hong Kong-listed restaurant chain Cafe de Coral (0341) reported earlier this month that its interim net profit plunged by 50 percent year-on-year to HK$81.20 million for the same period, with no pandemic aid from the government this year.

Also facing pressure from food costs and labor expenses, the company said at that time it may increase prices strategically by around HK$1 by restructuring the menu, but there was little room for higher price increases.

It declared an interim dividend of 10 HK cents, with basic earnings per share for the period falling 50 percent to 14 HK cents.

In other news, snack and beverage maker Want Want China (0151) posted a 7 percent growth in net profit to 2.09 billion yuan (HK$2.56 billion) in the six months ended September and declared an interim dividend of 0.83 US cents (6.47 HK cents).