Business Review

Consistent with the Group’s strategy of proactively managing our business portfolio, the Rustan Supercenters business was successfully integrated into Robinsons Retail in 2019. The Rustan deal as well as the execution of our store optimisation plan in Southeast Asia led to sales for the Grocery Retail unit reducing by 12% to US$5.2 billion. Operating profit, however, increased close to three-fold to US$63 million, compared to US$22 million reported in 2018. The improvement in performance was driven by Southeast Asia, as we continue to execute towards our multi-year transformation plan, with the space optimisation plan also yielding benefits.

Sales in Hong Kong and Macau were ahead of the prior year. While the social unrest in Hong Kong did disrupt trading, Wellcome’s like-for-like sales grew as customers shifted towards eating at home. Underlying profitability improvements have been encouraging as we start to enhance efficiency across the business despite some cost pressures. Reported profitability was impacted by ongoing investments in people and capabilities. Our price reinvestment campaign in Taiwan led to improved performance in the second half, despite the market backdrop of weak sentiment and fierce competition.

The divestment of the Rustan Supercenters business as well as the Southeast Asian space optimisation plan impacted our reported sales for Southeast Asia Grocery Retail. However, the space optimisation initiatives as well as improvements in format and range are delivering some encouraging results, particularly in our upscale and smaller format stores. Ongoing success in executing against our transformation plan supported profit growth for the Southeast Asian grocery businesses in 2019.

Convenience sales increased 4% to US$2.2 billion, driven by new store growth and strong like-for-like sales in China. Underlying profit performance for the Division was pleasing. Investments into the growth of our China business, however, as well as the non-recurrence of some one-off factors which positively impacted profit in 2018 led to reported profits for the Division reducing by US$6 million to US$82 million.