KUALA LUMPUR: The Malaysian retail industry achieved a better-than-expected growth rate of 3.8% in retail sales for the first quarter of 2019 (1Q19) as compared with the same period in 2018, said the Domestic Trade & Consumer Affairs Ministry (KPDNHEP).
Deputy Minister Chong Chieng Jen (pix) said as of 1Q19, the services sector contributed 57% to gross domestic product (GDP) and the wholesale and retail sub-sector was the main growth momentum for the services sector.
“At the same time, the sales of wholesale and retail trade in May 2019 contributed an amount of RM110.8 billion to national GDP and accounted for approximately 1.8 million in manpower as a whole,” he said in his keynote speech at the Malaysia Retail Chain Association (MRCA) Retail Conference 2019 here today.
The conference was held in conjunction with MRCA’s Malaysia International Retail & Franchise 2019 taking place from July 18 till 20.
Chong said the liberalisation of the Malaysian retail sector in 2012 continues to encourage more foreign retailers to invest and set up their retail stores within shopping malls in Malaysia.
He said six foreign large retailers are operating in Malaysia namely Tesco, Giant, AEON, AEON Big, Isetan and Lulu.
However, Chong said the supermarket/hypermarket sub-sector saw a negative growth at -2.3%, but it was better than the -3.8% growth rate in 1Q18.
“I see this phenomenon as an inevitable global trend, with the retail sector in Japan and Thailand now also dominated by the convenience store,” he added.
Founded in 1992, MRCA is an association for chain store retailers and franchisors determined to enhance the retail and franchise environment in Malaysia and abroad.
Today, MRCA has grown to become an influential entity comprising more than 500 leading retail chain stores and franchisors, including established brands such as Poh Kong, Secret Recipe, Focus Point, Subway, Senheng, 7-Eleven, OSIM, Bonia, Naza Motor, Mydin, Bently Music and others.
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PETALING JAYA: Malaysia’s manufacturing sector is optimistic as business confidence about the outlook strengthened to its highest since October 2013 despite manufacturing’s Purchasing Managers’ Index (PMI) continued to fall in June.
According to June survey data, the manufacturing sector faced further challenges, with demand conditions softening, while fewer new orders from international clients also weighed on production volumes. However, companies anticipate that current difficulties will be short-lived.
With the survey finding a greater number of respondents anticipating higher output over the next 12 months, economic growth is expected to accelerate further.
The headline IHS Markit Malaysia Manufacturing PMI registered 47.8 in June, down from 48.8 in May. Overall, the PMI is broadly indicative of annual GDP growth of approximately 4%, according to historical comparisons.
IHS Markit chief business economist Chris Williamson said operating conditions remained challenging for Malaysia’s manufacturers in June, once again reflecting tough trading in export markets.
Williamson pointed out that the PMI is an indicative of manufacturing’s contribution to drive a rebound in the annual pace of economic growth from the slowdown to 4.5% seen in the first quarter, although it is likely to remain below 5% in the next quarter.
Encouragingly, he said manufacturers continued to see signs that the business outlook is brightening.
“Business optimism about the future continued to be dogged by worries about the impact of the US-China trade war on the global economy, but has nevertheless risen to its highest since late-2013. Increasing numbers of firms stepped up their marketing and sales efforts and reported new projects, products and investments amid signs that underlying sales growth has improved.”
Although the June survey results mark the second month the PMI fell in succession, the average for the second quarter as a whole was above that seen in the opening quarter of 2019.
“Analysis of comparable historical official data on Malaysian manufacturing output suggests that, at current levels, the survey’s output index signals annual production growth of just over 3%.”
The latest survey also indicated that Malaysian manufacturers adopted a balanced approach to hiring, with employment levels remaining broadly unchanged since May.
PETALING JAYA: Berjaya Corp Bhd (BCorp) recorded a pre-tax profit of RM244.52 million for fourth quarter ended April 30, 2019 compared with a pre-tax loss of RM43.05 million a year ago, due to higher investment related income arising from the gain on disposal of a joint venture amounting to RM191.99 million.
In a filing with Bursa Malaysia, the group said that the hotels and resorts segment reported higher earnings on the back of higher average room rates despite an overall lower occupancy rate while the local gaming operations recorded higher profit from lower prize payout and operating expenses during the quarter.
Revenue for the quarter under review rose 5.1% to RM2.22 billion from RM2.11 billion a year ago, thanks to higher revenue reported by the marketing of consumer products and services segment as well as the hotels and resorts segment.
“The marketing of consumer products and services segment reported higher revenue mainly because the overseas motor distribution business reported higher revenue from the sales of new models in the new car sector,” it said.
However, the retail distribution business reported lower revenue due to intense competition, the absence of major product launches and the reduced number of outlets resulting from the group’s ongoing efforts to rationalise the cost structure of the retail distribution business.
The restaurants and cafes business achieved higher revenue due to same-store sales growth recorded by Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks) and additional Starbucks cafes operating in Malaysia compared with a year ago.
The hotels and resorts segment reported higher revenue from higher average room rates despite the overall lower occupancy rate while the gaming operations operated by Sports Toto Malaysia Sdn Bhd recorded higher revenue despite the lower number of draws in the quarter.
For the 12-month period ended April 30, 2019, BCorp recorded a pre-tax profit of RM477.02 million compared with a pre-tax loss of RM115.9 million a year ago while revenue fell 3.49% to RM8.36 billion from RM8.67 billion a year ago.
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HONG KONG: China’s Huawei Technologies Co Ltd has taken a harder-than-expected hit from a US ban, the company’s founder and CEO Ren Zhengfei said, and slashed revenue expectations for the year.
Ren’s downbeat assessment that the ban will hit revenue by US$30 billion (RM125 billion), the first time Huawei has quantified the impact of the US action, comes as a surprise after weeks of defiant comments from company executives who maintained Huawei was technologically self-sufficient.
The United States has put Huawei on an export blacklist citing national security issues, barring US suppliers from selling to the world’s largest telecommunications equipment maker and No. 2 maker of smartphones, without special approval. However, the company has been granted a 90-day reprieve.
The firm has denied its products pose a security threat.
The ban has forced companies, including Alphabet Inc’s Google and British chip designer ARM to limit or cease their relationships with the Chinese company.
Huawei had not expected that US determination to “crack” the company would be “so strong and so pervasive”, Ren said, speaking at the company’s Shenzhen headquarters today.
“We did not expect they would attack us on so many aspects,” Ren said, adding he expects a revival in business in 2021.
“We cannot get components supply, cannot participate in many international organisations, cannot work closely with many universities, cannot use anything with US components, and cannot even establish connection with networks that use such components.”
Huawei, which turned in a revenue of 721.2 billion yuan (RM432.7 billion) last year, expects revenue of around US$100 billion this year and the next, Ren said. This compares to an initial target for a growth in 2019 to between US$125 billion and US$130 billion depending on foreign exchange fluctuations.
Ren was asked if he could confirm media reports citing anonymous sources which said its overseas smartphone sales had fallen by up to 40%. “Yes, (sales) have fallen 40%,” he said.
Ren gave no further details on the sales plunge but a Huawei spokeswoman later clarified that he was referring to a 40% fall from May to June in the wake of the US blacklist.
Ren added, however, that sales growth in China’s domestic market remained “very fast”.
Huawei was the world’s number two smartphone producer last year, ahead of Apple and behind South Korea’s Samsung, as well as the largest provider of telecom networking equipment.
Huawei has said it shipped a total of 206 million smartphones in 2018, about half in China and half overseas.
Ren, 74, said Huawei planned to cut production by US$30 billion over the next two years to ride out the storm. He did not specify which lines of business would be hit most.
Huawei earned just over US$100 billion in revenue in 2018, so a US$30 billion reduction would equate to about 30% of last year’s overall business.
But Ren, who compared Huawei to a damaged but still-flying aircraft, added that he expected the company to soon back on track. “In 2021, we will regain our vitality and (continue to) provide services to human society,” he said.
The Trump administration slapped sanctions on Huawei at a time when US-China trade talks hit rough waters, prompting assertions from China’s leaders about the country’s progress in achieving self-sufficiency in the key semiconductor business.
Huawei has also said it could roll out its Hongmeng operating system (OS), which is being tested, within nine months if needed, as its phones face being cut off from updates of Google’s Android OS in the wake of the ban.
But industry insiders have remained sceptical that Chinese chip makers can quickly meet the challenge of supplying Huawei’s needs and those of other domestic technology firms.
Two US tech experts, George Gilder and Nicholas Negroponte, also joined the session.
Negroponte, founder of the Massachusetts Institute of Technology Media Lab, said the US ban was a mistake.
“Our president has already said publicly that he would reconsider Huawei if we can make a trade deal. So clearly that is not about national security,” he said.
“It is about something else,” Negroponte added.
Huawei’s smartphone sales have, however, been hit by the uncertainty. Ren said the firm’s international smartphone shipments plunged 40%. While he did not give the time period, a spokesman clarified the CEO was referring to the past month.
Bloomberg reported on Sunday that Huawei was preparing for a 40-60% drop in international smartphone shipments.
The CEO, however, said Huawei will not cut research and development spending despite the expected hit from the ban to the company’s finances and would not have large-scale layoffs.
PETALING JAYA: Berjaya Food Bhd’s (BFood) net profit for the fourth quarter ended April 30, 2019 jumped over fourfold to RM4.05 million from RM837,000 a year ago as a result of higher revenue, coupled with lower finance cost.
It registered a 6.2% increase in revenue to RM169.93 million from RM160 million in the previous year’s corresponding quarter mainly due to the same-store-sales growth recorded by Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks) as well as additional Starbucks cafes operating in Malaysia compared to the corresponding quarter of the previous year.
For the 12-month period, BFood’s net profit grew 22 folds to RM26.31 million from RM1.18 million a year ago thanks to higher revenue, coupled with lower finance cost and the absence of a loss arising from the group’s disposal of its Kenny Rogers Roasters operations in Indonesia.
The group registered a 6% higher revenue of RM678.43 million as compared to RM639.74 million in the previous year’s corresponding period mainly due to the same-store-sales growth recorded by BStarbucks as well as additional Starbucks cafes operating in Malaysia in the current period under review.
The board has recommended a fourth interim dividend of 1.0 sen single-tier dividend per share in respect of the financial period ending June 30, 2019 to be payable on July 26, 2019. The entitlement date has been fixed on July 11, 2019.
The total dividend declared for the financial period ended April 30, 2019 amounted to 4.0 sen single-tier dividend per share.
“The group expects the overall operating results for the remaining months (May and June 2019) of the financial period (as a result of the change in financial year end to June 30, 2019) to be affected by the Muslim fasting month, which fell in May,“ BFood said.
BFood’s financial year end has been changed from April 30 to June 30 to coincide with the new financial year end of its holding company, Berjaya Corp. The next set of financial statements will be from May 1, 2018 to June 30, 2019 covering a period of 14 months.
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