Covid relief sees profit soar for Cafe de CoralFinance | Winnie Lee 16 Jun 2021
Government pandemic relief and subsidies helped fast-food restaurant chain Cafe de Coral (0341) book a nearly fourfold increase in annual net profit.
Cafe de Coral's net profit for the year ended March 31 surged 387 percent year on year to HK$359.13 million due to Hong Kong and mainland government pandemic subsidies of HK$638.87 million, chief executive Peter Lo Tak Shing said.
The government subsidies over the Covid-19 pandemic included HK$486.77 million under the Employment Support Scheme, which was used in its entirety for paying salaries and wages to employees.
The other subsidies of HK$135.97 million were granted under the Anti Epidemic Fund of the government.
The restaurant chain declared a final dividend of 28 HK cents.
Basic earnings per share were 62 HK cents.
However, the group recorded a net loss of HK$280 million, excluding all the subsidies, Lo said.
Revenue dropped by 15.7 percent to HK$6.71 billion.
Revenue from Hong Kong plunged 19.8 percent to HK$5.51 billion. The Hong Kong institutional catering income fell most significantly, down 44.1 percent to HK$534.7 million.
The major revenue source, quick-service restaurants, decreased by 15.4 percent to HK$4.22 billion.
In contrast, revenue from mainland China jumped 10.1 percent to HK$1.2 billion.
The gross profit margin decreased 3.6 percentage points to 5.6 percent due to weak market sentiment and social distancing measures amid the Covid pandemic.
By the end of March, the number of stores in Hong Kong had fallen by four to 352. The group had a network of 121 stores in mainland China, adding seven. The group will continue network expansion with a focus on Guangzhou and Shenzhen. The South China fast-food business has 17 stores in the pipeline to open in 2021/22.
The group had a workforce of 18,109 employees, compared with 18,832 last year.
Although the evening market has stabilized since April and sales have grown from a low base, the 50 percent attendance level restriction on the catering industry is still a curse to revenue, said Lo. It is not possible to compensate with takeaway business. The rescheduling of classes also weighed on the catering business, he added.
Cafe de Coral's shares edged up 0.84 percent in trading yesterday.