MPPA Reports H1 Results, Focuses on Cutting Costs
Jakarta. Listed retailer Matahari Putra Prima, which owns the Hypermart chain, will continue its cost-cutting drive, following a loss it made amid market headwinds throughout the first half of the year, according to a statement released on Monday (31/07).
Matahari Putra Prima (MPPA) booked a Rp 169.8 billion ($12.8 million) loss in January-June, a swing from Rp 24.9 billion profit in the same period last year.
Sales were also lower by 3 percent annually, at Rp 6.7 trillion.
Despite the challenges, the retail chain saw improvements on a quarterly basis for both sales and profit.
"The business restructuring over the past 18 months is starting to pay off as MPPA sales have been on a better track than of its major competitors in modern retail," the statement said.
The retail chain noted that its gross profit margin contracted by 100 basis points annually to 14.9 percent due to investment in the company's recent price lowering for 5,00 0 items — a strategy aimed at regaining competitive position.
"Early indications of the pricing strategy are encouraging," the statement said.
The company focused the strategy on fast moving consumer items available in mini markets. MPPA used the so-called "shift to cost" process, allowing it to better align its business model using data at stock keeping level.
MPPA will continue with its cost-cutting strategy and will support its online business. The company's chief executive announced in the 2016 annual report a "rationalization" of the number of executives to boost efficiency by 20 percent before December.
"We believe our online business will strategically complement our existing traditional brick-and-mortar business," he said, adding that the online business can contribute to "positive revenue growth" generated by the company's existing outlets.
The company currently has a network of more than 300 distribution points in 73 cities, including 117 hypermarkets, 26 supermarkets, 30 convenience stores and 112 health and beauty centers.
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