Singapore’s NTUC Fairprice plans to invest US$26.7mn expanding its network

July 31, 2009 - PRLog -- Q209 saw little merger, acquisition or expansion activity largely due to Singapore's economy taking a severe pounding as a result of the global slowdown. It is predicted that GDP will contract by 7.2% in 2009 and this coupled with only moderate per capita food consumption growth of 11.2% leaves companies fearful of making heavy investments in such an uncertain climate.

Many of Singapore's food and beverage producers have witnessed a drop in profits as input costs rise and consumers reduce their spending amid financial concerns. For FY08 Petra Foods announced a 12.9% reduction in net profit to US$22.9mn, for the same period Yeo Hiap Seng recorded a net loss of US$7.1mn – more than double the loss it made for FY07. Singapore's Fraser and Neave is also feeling the pinch, with sales for Q109 dropping 6% to US$821.8mn and profit before interest and tax (PBIT) for the same period falling 24% to US$104.0mn. One company feeling more positive is Asia Pacific Breweries (APB) who posted revenue growth of 2.2% to US$380.2mn for Q109, while PBIT rose 5% to US$57.2mn for the same period.

Moving to the mass grocery retail (MGR) sector, Q109 saw Singapore's NTUC Fairprice announce plans to invest US$26.7mn expanding its network and upgrading its existing stores. The company hopes to take advantage of the expected increase in sales through modern retail outlets, which are forecast to increase 32.7% to US$3.82bn by 2013. With the worsening economic situation consumers are becoming more price conscious, therefore eating out less and retailers such as NTUC Fairprice are picking up the slack and benefiting from the increase in sales this brings them.

While the global recession is casting a shadow over the short-term outlook, the report remains upbeat about Singapore's potential in the longer term, forecasting a mild recovery in economic growth from 2010, before a full recovery in 2011. This offers some positivity to food and drink producers operating in the country.

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