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Ramayana expects lower revenue, profits in second half
PT Ramayana Lestari Sentosa (RALS), the operator of Ramayana department stores, is expecting a decline in profits and revenue in the second half amid economic slowdown that has hit the retail industry
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PT Ramayana Lestari Sentosa (RALS), the operator of Ramayana department stores, is expecting a decline in profits and revenue in the second half amid economic slowdown that has hit the retail industry.
'We expect around a 4 percent decline in revenue in the second half compared to last year and around 7 percent decrease in profit,' RALS finance director Suryanto told The Jakarta Post on Wednesday.
The company, which also operates the Robinson and Cahaya stores, might also fall short of achieving its total revenue target of Rp 8 trillion (US$553.9 million) this year, he said.
Suryanto said the bleak outlook was expected because the retail sector was usually the first to be affected by economic pressure and the last to recover.
Major retailers such as fashion and supermarket businesses reported a decline in earnings during the first quarter, as the economy grew only 4.7 percent, the slowest in six years.
The country's growth declined further to 4.67 percent in the second quarter.
With the ever slowing economy, the company saw a slight decline in revenue to Rp 2.52 trillion in the first half of the year from Rp 2.65 trillion in the same period last year.
Its profits dipped 11.8 percent to Rp 90.8 billion from Rp 103 billion, according to its financial report.
'The profit decrease was due to the rising minimum wage and other costs,' he said.
The company has started a buyback plan to anticipate mounting pressure in the stock market, where the Jakarta Composite Index (JCI) has fallen more than 15 percent to date.
According to Suryanto, the company had already bought around 49.2 million shares worth Rp 29.4 billion by Sept. 14, facilitated by a Financial Services Authority (OJK) policy that allowed companies to buy back shares without a shareholders' meeting (RUPS).
In its RUPS held Wednesday, RALS shareholders gave the company a green light to buy back a maximum of 567.6 million shares worth Rp 400 billion, or 8 percent of its total shares.
The buyback process was slated to last until March 2017.
Given the current situation, Ramayana will also put the brakes on expansion plans. However, the retailer will turn 16 of its existing outlets into SPAR stores.
The move was made following an agreement with Dutch multinational chain SPAR.
So far, the company has turned seven Ramayana outlets into SPAR supermarkets in Greater Jakarta, along with one new SPAR supermarket in Malang, East Java.
'There won't be any expansion this year. The only real expansion is just the one in Malang,' Suryanto said, adding that the company would also open a new SPAR supermarket in Cengkareng, Tangerang, by the end of the month.
The company expected a 15 percent increase of sales for each new SPAR supermarket, although he said that the company might not meet the target this year.
The company has only spent Rp 80 billion of its capital expenditure to date from its allocated budget of Rp 360 billion. (fsu)
