KUALA LUMPUR: Oldtown Bhd said the outlook for both its cafe chain operation and manufacturing of beverages segments remains competitive and challenging.
The F&B concern posted 52% lower earnings of RM11.63mil on the back of RM114.65mil revenue year-on-year for the third quarter ended Dec 31, 2017, due to foreign exchange losses and higher operational costs.
Year to date, the group's earnings have fallen 14% to RM43.61mil compared to the year-ago period while revenue has risen 6% to RM338.15mil.
In a filing with the stock exchange, Oldtown said it believes weak consumer sentiments will continue to impact consumer purchase behaviour while tighter regulations by the Malaysian government will also adversely impact the F&B industry.
It aims to manage the business environment through strengthening the value perception among current users of the brand.
"With the HAPPY SAVERS set meals value platform launched in April 2017, we will through a targeted media placement and communication strategy, create awareness of this value centric offerings so as to cast a wider net and reach to attract the lapse users of the brand and even new users."
It said its Singapore operations growth strategy will be anchored on growing profitably while its network expansion will be pushed via the "Basic" lower-cost model concept outlets.
As for further expansion, it is looking into the key markets of China and Indo-China as well as the Middle East halal markets for its cafe chain operations.
"The basic infrastructure has also been set up for the expansion into China with the acquisition of Guangzhou Supreme Food Services Limited as the manufacturer of paste and sauces for the café operations and the incorporation of Shenzhen Kopitiam Asia Pacific Limited as the trading and management arm for the café operations in China."
Similarly for its beverage manufacturing segment, Oldtown will be pursuing growth opportunities via the export market and transforming its product portfolio.
For the 2018 financial year, it expects strong growth from the export market driven by China, Australia, the US, Indonesia and the Philippines.
"In the domestic market, we will strengthen our market position by introducing distributors’ performance management program, capturing online channel opportunities and driving excellence in outlet execution," it said.
It also plans to increase its investment in capital expenditure for its manufacturing facilities to improve its automation processes to improve efficiency and drive cost savings.
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