Despite signs of inflation easing in Malaysia in April this year, the devaluation of the Malaysian Ringgit against the US Dollar has increased the cost of imported goods, leading to higher prices for food and raw materials.

Berjaya Food Berhad (BJFOOD, 5196) has revealed in its fourth-quarter financial performance the adverse impact of inflation and currency devaluation on the company's profitability. Without further ado, let's delve into the Q4FY2023 results of BJFOOD that were announced few days ago.

Revenue Comparison (YoY -6.70%, QoQ +2.21%)

As of June 30th of this year (Q4FY2023), the company reported revenue of approximately RM271.75 million, a decrease of about 6.70% compared to the same period last year's RM291.27 million. This decline was attributed to lower coffee sales at the company's Starbucks outlets.

However, compared to the previous quarter, the company's revenue increased by around RM5.90 million or 2.21%. According to management, this was driven by frequent and effective promotional and marketing activities during this period. Additionally, the addition of new Starbucks outlets contributed to the higher revenue in this quarter as well. It is reported that as of the end of March this year, the company had a total of 379 Starbucks outlets and announced plans to increase that number to 400 by July. Hence, the revenue saw a corresponding boost.

(Note: The company's fiscal year ends on June 30th each year.)

Net Profit Comparison (YoY -57.50%, QoQ +8.40%)

Due to inflationary pressures and the devaluation of the Ringgit against the US Dollar, BJFOOD's net profit dropped by approximately 57.50% from last year's RM40.66 million to RM17.28 million. Furthermore, the company's net profit margin was compressed from around 13.95% last year to about 6.35%. On a side note, the company incurred forex losses of approximately RM1.44 million in this quarter.

Similar to the case of revenue compared to the previous quarter, the net profit increased by about RM1.34 million or 8.40%.

Summing up BJFOOD's performance in the 2023 fiscal year, the company's total revenue and net profit were approximately RM1,115.96 million and RM103.40 million, respectively. Compared to the 2022 fiscal year, total revenue grew by around 11.84%, while total profit declined by about 15.73%. The company's earnings per share also saw a substantial drop of 82.72% to 5.88 cents.

Nevertheless, the company still announced the distribution of a fourth interim dividend of RM0.0050 for this quarter, with an ex-dividend date of September 11th and a payment date of September 26th, 2023.

Outlook

Management has indicated that the revenue of Malaysia's Starbucks will continue to grow and expects satisfactory performance in the upcoming fiscal year (2024 fiscal year).

Furthermore, BJFOOD will collaborate with Middle Trade Inc to open its first coffee bakery outlet, Paris Baguette, in the Philippines in the fourth quarter of this year (within September to December). This venture aims to introduce Korean-style French bread and pastries to the Philippine market. It’s noteworthy that Paris Baguette is the top-ranked bakery chain in South Korea, with a presence of over 3,500 outlets within the country. Furthermore, the brand boasts more than 480 stores across various countries including the United States, the United Kingdom, Canada, China, France, Vietnam, Indonesia, Cambodia, Malaysia, and Singapore.

So, dear readers, are you excited about the future prospects of BJFOOD?