PNG leading retailer CPL Group has announced its financial results for the first half of the year, highlighting a 13% decline in revenues, totaling K239.5 million, as the company grapples with the fallout from the January 10 riots which resulted in the closure of four stores.
Group Chairman Stan Joyce in a company statement released to the Port Moresby Stock Exchange said broader economic slowdown affecting various sectors in Papua New Guinea (PNG) has compounded these challenges, leading to a loss before tax of K13.8 million.
“Despite a slight improvement in gross profit margins, which increased by 1.9% to 33.9%, the group’s overall expenses rose by 4.6%. A significant portion of these expenses arose from the financial losses resulting from the riots, overshadowing the support received from the National Government” Mr. Joyce said.
In a bid to adapt and recover, CPL Group successfully reopened the SNS Badili store and launched a new SNS outlet at 8 Mile. The relocation of the SNS Gerehu store to a new site marks a proactive effort to enhance customer access and operational efficiency. The group’s pharmacy division, under the City Pharmacy brand, has experienced a 9% increase in sales, contributing an additional K6.3 million compared to last year, underscoring a sustained demand for health services amid economic uncertainty.
Conversely, the hardware division has struggled due to diminished project activity in rural areas and increased competition, which has adversely impacted sales. While joint ventures with Prouds DFS and Jacks of PNG managed to generate revenue growth, rising operational costs have eroded profit margins by K728,000 compared to the previous year.
In light of the challenges presented by the January events, CPL Group is focusing on strategic initiatives to foster sustainable growth. The appointment of Mr. Kee Lim as Executive Director reflects a commitment to improve operational efficiencies and better navigate the current economic landscape.
The company remains cautiously optimistic about achieving a break-even result by the end of the year, driven by ongoing efforts to adapt to changing economic conditions.
CPL Group emphasized its commitment to retaining staff throughout this difficult period, despite the significant impact on cash flow stemming from the January riots. The collaboration with banks and suppliers has been instrumental in managing these challenges effectively.
The company expressed appreciation to the PNG Government for its financial assistance, which has been critical in addressing the repercussions of the riots. CPL Group hopes that such disruptive incidents can be avoided in the future.