MANILA, Philippines–Gokongwei-led retailer Robinsons Retail Holdings Inc. (RRHI) booked P1.77 billion in first semester net profit, down by 32.4 percent from the sale period last year as non-cash interest expense on lease liability ballooned following a shift to new accounting standards.
RRHI reflected the year-to-date impact of adopting the new accounting standard on leases under Philippine Financial Reporting Standards (PFRS)16, under which a right-of-use asset is recognized and amortized over the lease term while interest expense is incurred on the lease liability. PFRS 16 adjustments are non-cash and have no effect on cashflow.
Due to PRSF16 adjustments, RRHI’s interest expenses skyrocketed to P1.2 billion in the first half from only P55 million the previous year. The shift to PFRS 16 thus reduced its net income attributable to parent company by P481 million or 21.3 percent versus pre-PFRS 16 reporting.
Excluding the impact of PFRS 16, operating income and cash flow as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 3.1 percent year-on-year to P3.1 billion and 11.3 percent to P4.6 billion, respectively.
RRHI recorded a 27.7-percent increase in consolidated net sales of P77.2 billion in the first semester, driven by the same store sales growth (SSSG) of 3.9 percent, additional sales coming from new stores opened in the last 12 months and the consolidation of Rustan Supercenters which it acquired in November 2018.
Excluding interest from bonds, equitized net earnings from the 40 percent stake in Robinsons Bank, treasury gains and losses as well as non-recurring expenses, RRHI’s core net profit fell by 24.4 percent year-on-year to P1.7 billion in the first half.
Excluding the franchised stores of The Generics Pharmacy, RRHI ended the year with a total of 1,920 stores consisting of 255 supermarkets, 49 department stores, 211 DIY stores, 518 convenience stores, 510 drugstores and 377 specialty stores. The group’s gross floor area expanded by 18.5 percent year-on-year to 1.39 million square meters.
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