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BUSINESS

Aeon seeks ways to avoid price hikes amid mounting costs, inflationary pressure

19/05/2022 05:22 PM

KUALA LUMPUR, May 19 (Bernama) -- Aeon Co (M) Bhd is striving to ensure that prices of its products do not inflate drastically amid the mounting costs and inflationary pressure.

Managing director and chief executive officer Shafie Shamsuddin said it is working with partners to seek new ways of sourcing materials in order to cut costs and sustain retail prices as much as possible.

Aeon will also be launching an anti-inflation campaign in June to help ease the consumers’ burden, he told reporters after the company’s virtual annual general meeting today.

Shafie said the prices of some products are expected to increase between three and five per cent.

‘’The price increases are generally requested by some of our suppliers due to the price pressure that they are facing,’’ he said.

Shafie noted that the majority of its products are sourced domestically with a minimal single-digit percentage of items being imported from abroad.

He said Aeon is also facing rising costs of employment.

He pointed out that 3,700 of its total employees, or 30-40 per cent, were given increments to raise their salaries from RM1,200 to RM1,500 following the new minimum wage policy enforced effective May 1.

However, he said, the additional costs are still relatively small compared to the total operating expenses incurred on a monthly basis.

These factors, coupled with shrinking consumer spending, had pressured Aeon’s retail business even before the pandemic, he said.

‘’However, in the last two years, we have been able to be agile in reacting to the very challenging period and as such, we are going to continue to thrive. We hope that by working together with all our partners, we will be able to serve our customers and community better,’’ he added.

On its capital expenditure, Shafie said the bulk will be spent on digitalisation, maintenance of existing assets, and the setting-up of new retail outlets.

He disclosed that new general merchandise departmental stores will be opened in the last quarter of 2022 with investments of between RM30 million and RM40 million.

Yesterday, Aeon reported a higher net profit of RM28.07 million in the first quarter ended March 31, 2022 (Q1 2022) compared with RM22.03 million a year earlier, while revenue slipped to RM1 billion from RM1.01 billion previously.

The group said its retail business recorded revenue of RM857.4 million, down 2.5 per cent compared to RM879 million in Q1 2021 as consumers spent more time outdoors and dining out instead of cooking at home.

Revenue from the property management services segment, however, rose 7.4 per cent to RM144.4 million from RM134.5 million previously, contributed by higher sales commission and temporary space rental received following the return of consumers to physical malls.

-- BERNAMA


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