Mr DIY’s 1Q earnings jump 27% on higher revenue and lower freight costs; pays 0.6 sen dividend

KUALA LUMPUR (May 11): Home improvement retailer Mr DIY Group (M) Bhd’s net profit rose 27.13% to RM127.77 million for the first quarter ended March 31, 2023 (1QFY2023) from RM100.5 million a year earlier (1QFY2022), thanks to higher revenue and lower freight costs, which boosted its gross profit.

Quarterly revenue climbed 15.6% to RM1.05 billion from RM905.16 million, driven by growth in same-store sales as well as contribution from new stores, its bourse filing showed. The number of stores grew 18.8% year-on-year (y-o-y) to 1,125, which led to a corresponding increase in total transactions, which grew 18.1% to 32.8 million in 1QFY2023, its bourse filing showed.

The group's gross profit rose 30.6% y-o-y to RM463.3 million, with a profit margin of 44.3% or 5.1 percentage points higher y-o-y lifted also by the impact of a price adjustment exercise it undertook in 3QFY2022, the group's bourse filing showed.

Earnings per share improved to 1.35 sen from 1.07 sen. A first interim dividend of 0.6 sen per share or about RM56.6 million — to be paid on June 23 — equivalent to 44.3% of its net earnings, was announced.

The group operates in both Malaysia and Brunei and both locations reported higher revenues and net profits.

Its Malaysian business contributed the bulk of its revenue at RM1.04 billion in 1QFY2023, up from RM899.26 million a year earlier. Net profit from the Malaysian segment stood at RM125.43 million from RM99.2 million.

Its Bruneian segment's revenue about doubled to RM11.08 million from RM5.9 million previously, raising net profit to RM2.52 million from RM1.3 million.

Chief executive officer Adrian Ong said the latest set of results highlight the group's ability to deliver sustainable growth, underpinned by its value for money offerings, despite a challenging environment and inflationary pressures.

"Despite operating cost pressures, we continue to record improvements in our operating margins driven by earlier price increases put through during 3QFY2022 as well as lower freight costs which have normalised mainly due to the improvement in the global supply/demand situation for containers and vessels. Should these conditions prevail, we expect to see the full benefit of it in FY2023," Ong said.

The group also sees the prevailing inflationary environment as one that puts it in "a good position to benefit from the strong demand for our affordable, everyday items”, he said. “The more favourable freight environment also favours a better performance going forward.”

The group plans to keep investing in sustainable growth through a measured store expansion strategy, innovations in store formats that suit market needs, while continuing to provide its customers with value, convenience and a wide range of products, he added.

The home improvement retailer targets to open 180 new stores across all its brands this year, to raise its total stores to over 1,200, and further cement its position as the country's largest home improvement retailer.

Mr DIY's share price closed unchanged at RM1.59 on Thursday (May 11), giving the group a market capitalisation of RM15 billion.