MD & A

Archive : Management's Discussion and Analysis.

Management’s Discussion and Analysis (MD&A) for 3 months and 9 months ended
30 September 2019

Key summary of 3Q19

  • Net profit - In 3Q19, net profit amounted to Baht 619 million, dropped by 6.8%, mainly from sales dropped and lower share of profit of associates.
  • Total revenue - In 3Q19, total revenue reported to Baht 7,381 million, decreased by 4.7% mainly from sales dropped which mainly affected from low customer spending, competitor impacts, store renovations, tourists dropped, and flooding in some northeastern stores.

Summary of income statement for the 3-month period ended 30 September 2019 and 30 September 2018 (Consolidated)

Unit : Million Baht
Consolidated financial statement 3Q19 3Q18 Increase
(Decrease)
% Change
Revenue from sales of goods 2,687 2,795 (108) (3.9%)
(Total sales 6,129 6,554 (426) (6.5%))
Rental income 985 947 39 4.1%
Investment income 6 6 (0) (0.2%)
Other income 262 235 26 11.3%
Net revenue 3,939 3,983 (43) (1.1%)
(Total revenue 7,381 7,742 (361) (4.7%))
Cost of sales of goods 1,270 1,254 16 1.3%
Selling expenses 1,575 1,649 (74) (4.5%)
Administrative expenses 401 336 65 19.2%
Finance costs 7 9 (2) (17.6%)
Total expenses 3,253 3,248 5 0.2%
Share of profit of associates 79 100 (21) (21.2%)
Profit before income tax expense 765 835 (69) (8.3%)
Income tax expense 121 134 (14) (10.3%)
Net profit 619 664 (45) (6.8%)

Financial performance in 3Q19

  • Total sales decreased by Baht 426 million or 6.5% from 3Q18 to Baht 6,129 million in 3Q19, mainly from low customer spending, competitor impacts, store renovations, tourists dropped, and flooding in some northeastern stores.
  • Rental income was reported at Baht 985 million, increased by Baht 39 million or 4.1% from 3Q18. The growth was driven by the growth of existing and new lifestyle centers in last year. The average occupancy rate maintained at 99%.
  • Total revenue was Baht 7,381 million, decreased by Baht 361 million or 4.7% from 3Q18, mainly from sales dropped.
  • Gross profit decreased by Baht 124 million or 8.1% from 3Q18 to Baht 1,417 million in 3Q19. The gross profit margin* was at 23.1%, declined by 0.4% from 3Q18, resulted from higher sales mix of lower margin categories as well as pricing promotions to stimulate customer spending.
    Note: *Gross profit margin = (Revenue from sales of goods - Cost of sales of goods) / Total sales
  • Selling and administrative expenses amounted to Baht 1,976 million, decreased by Baht 9 million or 0.5% from 3Q18, mainly from lower depreciation and amortization expenses of existing stores and lower credit card and packaging expenses resulting from sales dropped.
  • Finance costs decreased by Baht 2 million or 17.6% from 3Q18 to Baht 7 million in 3Q19, resulting from loans repayment and lower interest rate.
  • Share of profit of associates was Baht 79 million, decreased by Baht 21 million or 21.2% from 3Q18, from performance dropped of both Power Buy Co., Ltd. and CRC Sports Co., Ltd.
  • Income tax expense amounted to Baht 121 million, decreased by Baht 14 million or 10.3% from 3Q18.
  • Net profit amounted to Baht 619 million, dropped by 6.8% from 3Q18, mainly from sales dropped and lower share of profit of associates.

Summary of income statement for the 9-month period ended 30 September 2019 and 30 September 2018 (Consolidated)

Unit : Million Baht
Financial position 9M19 9M18 Increase
(Decrease)
% Change
Revenue from sales of goods 8,377 8,264 113 1.4%
(Total sales 18,975 19,153 (178) (0.9%))
Rental income 2,956 2,732 224 8.2%
Investment income 19 17 2 14.3%
Other income 782 679 103 15.1%
Net revenue 12,134 11,692 442 3.8%
(Total revenue 22,731 22,581 151 0.7%)
Cost of sales of goods 3,918 3,629 289 8.0%
Selling expenses 4,820 4,713 107 2.3%
Administrative expenses 1,167 1,055 111 10.5%
Finance costs 16 33 (17) (50.7%)
Total expenses 9,921 9,430 491 5.2%
Share of profit of associates 133 388 (256) (65.8%)
Profit before income tax expense 2,345 2,650 (304) (11.5%)
Income tax expense 395 408 (13) (3.2%)
Net profit 1,861 2,120 (259) (12.2%)
Net profit (excl. one-off/special items*) 2,127 2,120 6 0.3%

Note: *One-off/special items included 1) associate’s loss on investment Baht (178.4) million, 2) provision for retirement benefits of Baht (49.8) million (details in Note 9 of financial statement), and 3) tax expenses of indirect associate in Vietnam Baht (37.1) million (details in Note 6 of financial statement).

Financial performance in 9M19

  • Total sales decreased by Baht 178 million or 0.9% from 9M18 to Baht 18,975 million in 9M19, mainly from sales dropped which mainly affected from low customer spending, competitor impacts, store renovations, tourists dropped, and flooding in some northeastern stores.
  • Rental income was reported at Baht 2,956 million, increased by Baht 224 million or 8.2% from 9M18. The solid growth was driven by the growth of existing and new lifestyle centers in last year. The average occupancy rate maintained at 99%.
  • Total revenue was Baht 22,731 million, increased by Baht 151 million or 0.7% from 9M18, mainly from rental income and other income growth.
  • Gross profit decreased by Baht 176 million or 3.8% from 9M18 to Baht 4,459 million in 9M19. The gross profit margin* was at 23.5%, declined by 0.7% from 9M18. Excluding non-recurring adjustment of rebate/inventory value, gross profit margin was at 23.6%, declined by 0.6% from 9M18, resulted from higher sales mix of lower margin categories as well as pricing promotions to stimulate customer spending.
    Note: *Gross profit margin = (Revenue from sales of goods - Cost of sales of goods) / Total sales
  • Selling and administrative expenses amounted to Baht 5,986 million, increased by Baht 218 million or 3.8% from 9M18, mainly from expenses of new stores as well as one-off/special items, i.e. provision for retirement benefits Baht (49.8) million and non-recurring utility charge of Baht (22.3) million (excl. VAT).
  • Finance costs decreased by Baht 17 million or 50.7% from 9M18 to Baht 16 million in 9M19, resulting from loans repayment and lower interest rate.
  • Share of profit of associates was Baht 133 million, decreased by Baht 256 million or 65.8% from 9M18, mainly from one-off/special items, i.e. associate’s loss on investment Baht (178.4) million and tax expenses of indirect associate in Vietnam Baht (37.1) million.
  • Income tax expense amounted to Baht 395 million, decreased by Baht 13 million or 3.2% from 9M18.
  • Net profit reported at Baht 1,861 million, decreased by Baht 259 million or 12.2% from 9M18, mainly resulted from one-off/special items: 1) associate’s loss on investment Baht (178.4) million, 2) provision for retirement benefits of Baht (49.8) million (details in Note 9 of financial statement), and 3) tax expenses of indirect associate in Vietnam Baht (37.1) million (details in Note 6 of financial statement). Excluding these one-off/special items, net profit increased by 0.3% from 9M18.

Summary of statement of financial position as of 30 September 2019 and 31 December 2018 (Consolidated)

Unit : Million Baht
Financial position 30-Sep-19 31-Dec-182 Increase
(Decrease)
% Change
Cash and cash equivalents 960 1,894 (934) (49.3%)
Trade accounts receivable 391 497 (106) (21.3%)
Inventories 2,286 2,241 46 2.0%
Other current assets 615 828 (213) (25.8%)
Fixed assets1 18,453 17,913 539 3.0%
Other non-current assets 4,977 4,933 45 0.9%
Total assets 27,682 28,305 (623) (2.2%)
Trade accounts payable 3,861 5,229 (1,368) (26.2%)
Short-term loans & current portion of long-term loans 1,751 565 1,186 209.8%
Other current liabilities 1,551 2,239 (688) (30.7%)
Long-term loans - 109 (109) (100.0%)
Other non-current liabilities 1,411 1,340 71 5.3%
Total liabilities 8,573 9,483 (910) (9.6%)
Total equity 19,108 18,822 286 1.5%
Total liabilities and equity 27,682 28,305 (623) (2.2%)

Note:
1 Fixed assets include investment properties, property, plant and equipment, and leasehold rights
2 Reclassification of some accounts as disclosed in Note 16 of the Company’s financial statement in 3Q19

As of 30 September 2019, total assets amounted to Baht 27,682 million, decreased by Baht 623 million or 2.2% from the end of 2018, mainly from decrease in cash, trade accounts receivable, and other receivable. Total liabilities amounted to Baht 8,573 million, decreased by Baht 910 million or 9.6% from the end of 2018, mainly from payment of trade and other payable. Total equity was Baht 19,108 million, increased by Baht 286 million or 1.5%.

Capital Structure

As of 30 September 2019, the Company's capital structure comprised of total liabilities of Baht 8,573 million, which included interest-bearing debt Baht 1,751 million, and total shareholders' equity totaled Baht 19,108 million. Total liabilities to equity ratio of 0.4 times, while interest-bearing debt to equity ratio was at 0.09 times.