KUALA LUMPUR (Feb 28): Despite high expectation of an earnings recovery as the country entered the endemic phase, 7-Eleven Malaysia Holdings Bhd saw its net profit shrink 91% in the fourth quarter ended Dec 31, 2022 (4QFY2022).

Its net profit declined to RM2.65 million from RM29.4 million in 4QFY2021. Earnings per share fell to 0.24 sen from 2.61 sen.

The convenience store operator said it incurred higher operating expenses amid higher store operation-related expenses, followed by longer operating hours and minimum wage effect, as well as increase in store maintenance activities.

“In comparison, during the corresponding quarter last year we had received subsidies from the government and rental waiver of RM2.5 million,” said 7-Eleven in a stock exchange filing.

The group also recognised corporate expenses of RM11.6 million in 4QFY2022, primarily consisting of finance costs for the acquisition of Caring Group.

The sharp fall in net profit was despite a 24.82% growth in revenue to RM992.42 million from RM795.06 million in 4QFY2021, driven by revenue contribution from the group's pharmaceutical and convenience stores segments.

For FY2022 as a whole, 7-Eleven’s net profit grew to RM68.63 million from RM44.35 million in FY2021, while revenue increased to RM3.76 billion from RM2.81 billion.

Moving forward, the group said the convenience store segment will continue to focus on the roll-out of its 7-Café store format, which entails much improved product offerings and in-store customer experience.

“The 7-Café format is expected to contribute positively to the growth of our fresh food category. We will also continue our efforts to enhance our product assortment, fresh food and private labels to drive stronger sales mix for margin improvement/sustenance.

“Additionally, in the coming year, we plan to complete the construction of our new fresh food commissary, which has a capacity to serve up to 1,000 stores in Klang Valley. With better equipment/machines aiding automation of key processes at this new facility, we envisage to elevate the quality and consistency of our fresh food offerings to our customers,” said the group.

The pharmaceutical segment, which had shown much resilience over the pandemic, will continue to strengthen its market share together with The Pill House and Wellings group, it said.

“Wellings had successfully opened 15 stores in Indonesia via our joint venture with PT Era Caring Indonesia,” the group added.

Shares of 7-Eleven closed 4.12% lower at RM1.86 on Tuesday (Feb 28), giving the group a market capitalisation of RM2.29 billion.