KUALA LUMPUR (May 23): Focus Point Holdings Bhd (KL:FOCUSP), who saw its first quarter net profit jump 23% year on year, expects a boost in retail sales following the introduction of partial pension fund withdrawals, and possible margin expansion this year.

The company, which sells spectacles and runs a bakery chain, also believes that the government’s planned subsidy rationalisation will have minimal impact on consumer spending, according to its president and chief executive officer Datuk Liaw Choon Liang. Both optical and food-and-beverage sectors are essential, he noted.

“We continue to see strong growth in these two business segments,” Liaw told reporters after Focus Point’s annual general meeting on Thursday. The company also expects better profit margin from cost control measures including lower headcounts and contributions from food business that generally commands better profitability, he said.

Employees Provident Fund’s member accounts have been restructured into three separate accounts effective May 11, with 10% of the monthly contributions going into Account 3 that would allow withdrawals at any time.

The pension fund has projected withdrawals of RM25 billion in the first year following the rollout of Account 3. In addition, the government has announced an increase of at least 13% in civil servant salaries beginning December this year that would involve an additional allocation of more than RM10 billion.

Datuk Liaw Choon Liang. Photo by Mohd Izwan/The Edge

In the financial year ended Dec 31, 2023 (FY2023), the optical business contributed approximately 81% to the group’s revenue, while the food-and-beverage business accounted for 16%. The remaining revenue came from other segments (2%) and franchise management (1%).

Focus Point’s net profit margin has shown steady growth in past years, increasing from 6.64% in FY2020 to 14.43% in FY2022. However, margin shrank to 11.6% in FY2023 amid higher staff costs and rental from the opening of new outlets.

Liaw blamed the 29% decline in online sales within the optical business for FY2023 to lower general spending as well as the Malaysian Optical Council’s (MOC) prohibition on selling optical products through e-commerce platforms.

To address this challenge, the group plans to adapt different product offerings to comply with MOC guidelines, he said. Most of the online sales are contact lenses, Liaw continued, “but we have to do better this year in terms of sales from the e-commerce segment.”

On Thursday, the group reported that its net profit for the first quarter ended March 31, 2024 (1QFY2024) grew 22.89% to RM7.41 million from RM6.03 million a year earlier, as revenue rose 14.46% to RM68.3 million from RM59.67 million due to strong sales in both optical as well as food and beverage segments. The company declared a 1.75 sen dividend for the quarter under review, to be paid on June 28.

Looking ahead, Focus Point anticipates a strong year for the eyewear industry due to the high prevalence of myopia, particularly among children due to increased reliance on gadgets for e-learning during the Covid-19 pandemic, coupled with extensive computer and notebook use.

The group is also aiming to open 20 new outlets for the optical business segment this year across the Klang Valley, Northern, Southern and East Coast regions, bringing the total number of outlets to 200, Liaw said.

On Thursday’s close, shares of Focus Point were two sen or 2.37% lower at 82.5 sen, valuing the company at RM378.91 million. Year to date, the counter has risen by over 13%.