"Performance" Cafe de Coral's half-year net profit fell 67.6% to HKD 46.73 million, and the interim dividend was reduced to 10 cents

CAFE DE CORAL H (00341.HK) announced its interim results for the period ending September this year, with a revenue of HKD 4.036 billion, a year-on-year decrease of 5.4%. The net profit was HKD 46.73 million, down 67.6% year-on-year; earnings per share were 8.2 cents. An interim dividend of 10 cents was declared, compared to 15 cents in the same period last year.

During the period, the gross profit margin decreased to 8.2%, down from 10.3% in the same period last year, mainly due to weak economic conditions leading to overall low consumer sentiment and intense price competition. Additionally, Hong Kong was further impacted by the normalization of residents' outbound consumption and weak spending from inbound tourists. As of September 30, the group had 378 stores in Hong Kong, down from 381 at the end of March, and 190 stores in mainland China, up from 185 at the end of March.

The group stated that its business faces significant challenges under the structural transformation of the market. The normalization of residents' outbound consumption and weak spending from inbound tourists have led to a noticeable decline in foot traffic during traditional peak sales periods, resulting in more volatile sales performance and pressure on the group's business and profitability. However, its casual dining and institutional catering units have performed well due to their streamlined operating models and stable demand base.

The group further indicated that despite the ongoing challenges in the economic and operating environment in mainland China, it continues to steadily expand its store network in the Greater Bay Area. It is also committed to improving operational efficiency and driving business recovery and growth, with specific measures including: exploring new operating models; consolidating underperforming stores; streamlining operational processes and redesigning menu combinations, as well as improving profit margins through supply chain integration and cost control measures