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AEON Co. (M) reduces capital expenditure for 2019

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Japanese retailer AEON Co. (M) Bhd is lowering down their allocation of capital expenditure (capex) to RM500 million this since there are no new malls launching this year.

Executive Director of AEON Co. (M) Bhd Mr. Poh Ying Loo said after the company's annual general meeting (AGM) earlier today that they usually allocate between RM600 million to RM700 million in capex for new malls. However, for this year, they are only opening one new mall which is AEON Mall Nilai. Besides, they are currently refurbishing AEON Taman Maluri Shopping Centre and expect to reopen it soon.

"The rest of the capex will be allocated for the refurbishment of our existing branches although we haven't finalized which one to refurbish yet." Mr. Poh Ying Loo said.

AEON currently operates 28 AEON malls, 34 AEON outlets, one Maxvalu and four MaxValue Prime Supermarkets in Malaysia.

Managing director Mr. Shinobu Washizawa said the group has experience commendable growth in its e-commerce offerings since partnering with online grocery shop which are honestbee and HappyFresh.

"We have seen strong demand within this segment since this offering was rolled out in 2018. As of now, we have 15 outlets that are participating in the e-commerce segment and we are planning to roll out to more this year," Mr. Shinobu Washizawa said.

When asked, Washizawa said the company has no plans to establish its own e-commerce cum logistics company, but prefers to collaborate with existing e-commerce platforms instead.

Going forward, AEON Co is optimistic that the government will introduce consumer-friendly initiatives that augur well for the industry despite the uncertainties in economic and business outlook.

"Disposable income has been a little bit decreasing. It means the price competition is tough in Malaysia. We are paying attention to competitors' as well as commodities prices," said Washizawa, adding that cost prices have increased by six per cent due to market environments.

"The government also requires us to control the prices, but after Sales and Service Tax is introduced, cost price is increasing. This is one of the issues."

For the financial year ended 31 December 2018, the group posted a net profit of RM105.1 million, on the back of RM4.4 billion revenue, due to new malls and stores opening.

Going forward, the firm expects a subdued 2019 because of ongoing challenges which include increasing cost of living, higher cost of doing business and rising global trade conflict that still pose challenges to the retail industry.


Source: www.nst.com.my

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