S

upermarket operators PT Supra Boga Lestari and PT Hero Supermarket recorded lackluster performances in the first half of this year as lower revenue growth is exacerbated rising expenses.

Supra Boga ended the January-June period with Rp 5.79 billion (US$429,270) in net profit, a 33.9 percent slump from Rp 8.76 billion during the same period last year.

The firm saw its cost of revenue, selling expenses and finance cost rise substantially, putting heavy pressure on its slowing revenue growth, according to its financial report published on the Indonesia Stock Exchange (IDX) website on Thursday.

Supra Boga booked lower year-on-year (yoy) net revenues of 19.09 percent to Rp 933.04 billion in the first half of this year, compared to a 25.29 percent revenue growth from 2013 to last year.

'€œWhile [Supra Boga] sees lower revenue growth, the company'€™s double-digit growth amid the country'€™s economic slowdown has actually shown that its customer base was not affected much by the downturn,'€ said Reza Priyambada, an analyst with NongHyup Korindo Securities Indonesia.

The firm'€™s high-end supermarket chain Farmers Market made up 51.08 percent of the total net revenues in the first half of this year, followed by 99 Ranch Market and Ministop with contributions of 47.73 percent and 1.19 percent, respectively.

Supra Boga'€™s net revenues were heavily squeezed by the increase of selling cost and finance expenses that hit Rp 143.44 billion and Rp 5.3 billion, respectively '€” a 30.09 percent and 24.8 percent surge from the first half of last year.

One of the highest-rising components in the selling expenses was rental cost, which grew 36.1 percent y-o-y to Rp 41.2 billion this year compared to Rp 30.27 billion last year.

Another supermarket chain operator, Hero Supermarket, meanwhile, pocketed net loss of Rp 31.59 billion in the first six months of this year, a stark contrast to Rp 94.75 billion in net profit during the same period last year.

According to its first-half financial report, Hero'€™s net revenues grew by 15.08 percent yoy to Rp 7.48 trillion this year from Rp 6.5 trillion last year, lower than 17.12 percent yoy growth in 2013-2014.

The firm'€™s cost of revenues rose 16.9 percent to Rp 5.8 trillion in the first half of this year from Rp 4.96 trillion during the same period last year.

Its operating expenses also surged by 13.9 percent y-o-y to Rp 1.8 trillion, partly driven by rising rental fees.

With most of Hero'€™s supermarkets located in shopping centers, rental fees were on the rise in line with electricity rate hikes '€” among others, according to Reza.

Hero also recorded a franchise fee of Rp 14.68 billion in the first half this year, something that did not exist in the same period last year.

The company has obtained a license to operate Swedish furniture chain IKEA in the country.

Hero president director Stephane Deutsch said in a statement that the sales of the first IKEA store in the country had been very promising and that his firm would record a better performance in the second half.

'€œSeveral initiatives are also being implemented to reduce the impact of rising costs. We remain optimistic about the second half of 2015,'€ he said.

Hero'€™s main revenue boosters are its supermarket and hypermarket chains Hero and Giant.