Delfi (SGX:P34)’s 1H24 revenue came in at US$261mil, down 8% y-o-y; earnings at US$20mil, down 22% y-o-y. Top-line growth was adversely impacted by a combination of weak IDR:US$, soft Own Brands sales, and Agency Brand’s termination in Indonesia.
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Reduced promotions proved a drag on revenue.
Own Brands struggled with a 12% y-o-y revenue decline as the company reduced trade promotions. The decline was more apparent in Indonesia (-12% y-o-y) than regional (-10% y-o-y).
Loss of an Agency Brand in Indonesia.
Agency Brands declined by 2% y-o-y largely due to the loss of one in Indonesia. Excluding the loss, Agency Brands would have seen an 8.6% y-o-y growth.
Margin compression led to a disproportionate decline in earnings.
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Interim dividend maintained at 2.06UScts despite significantly lower earnings.
Delfi's dividend paying capacity continues to be supported by strong free cash flow generation of US$12mil (1H23: 10mil) despite capex spend doubling as the company optimises its working capital structure through effective inventory management. Balance sheet continues to remain healthy with a net cash position of US$23mil.
Analyst briefing: Key takeaways
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
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