Li & Fung

CR Asia posts 2pc gain in earnings

PUBLISHED : Thursday, 08 March, 2007, 12:00am
UPDATED : Thursday, 08 March, 2007, 12:00am


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Convenience Retail Asia, the Li & Fung unit that operates Circle K stores, expects its loss-making mainland operation to break even in 2009, two years later than originally estimated.

Second board-listed CR Asia, which posted a 2 per cent increase in full-year earnings to HK$75 million, said that the loss from the mainland widened to HK$19 million last year from HK$12 million a year earlier.

'We estimate the loss from the mainland this year will be about HK$19 million and the break-even period will lengthen by two years,' chief executive Richard Yeung Lap-bun said.

Mr Yeung said the start-up cost for entering the Shenzhen market - with two stores opening there - and the cost of adding four stores in Dongguan had offset sales growth in Hong Kong and Guangzhou.

Same-store sales in Hong Kong, where the company has 250 stores, grew 3 per cent last year. In Guangzhou, where it has 52 outlets, comparable store sales jumped 16 per cent.

CR Asia's turnover rose 11.8 per cent for the year to December to HK$2.23 billion. Earnings per share gained 1.8 per cent to 11.1 HK cents. The company declared a final dividend of five HK cents, up 11 per cent. It paid an interim dividend of 1.5 HK cents, the same as a year ago.

CR Asia, which took over main board-listed bakery firm Saint Honore for HK$629 million this month, will start integrating the two companies in the second quarter.

Mr Yeung said he was not concerned that the owner of 7-Eleven had agreed this week to buy a convenience store chain to boost 7-Eleven store numbers in Guangzhou by 65 per cent to 291.

Dairy Farm International Holdings, whose 7-Eleven outlets constitute Guangzhou's biggest convenience store chain, said it had agreed to buy Guangzhou Lianhua Quik Convenience for an undisclosed amount.

Mr Yeung said most of Guangzhou Lianhua Quik Convenience stores were in 'wrong' locations.

CR Asia shares, which have fallen 4.8 per cent in the past 12 months, closed down 0.72 per cent yesterday at HK$2.76.