In a statement released in conjunction with its annual general meeting, PetDag said “Mesra Retail and Café Sdn Bhd continued to drive and deliver commendable results in the non-fuel business segment with a 24% increase in revenue, exceeding market and sector growth”.
In the 2022 financial year (FY2022), PetDag’s convenience or “non-fuel” segment contributed RM16.12 million or 1.4% of its operating profit of RM1.15 billion.
The segment saw a 60% decline in profit before tax to RM15.7 million, from RM39.4 million a year earlier.
Despite this, the group’s CFO Farzlina Murad said that “the reduction in profitability was due to accounting, but fundamentally on the business side we are confident and we are working towards growing this segment”.
She insisted that the expansion in the segment – namely the Setel App and Cafe Mesra – is a journey the group will have to go through, despite the growing pains.
To this end, the group’s managing director and CEO Azrul Rani said that PetDag is currently on a learning curve, adding that initially the group will need to put in significant capital and operational expenditure into the segment.
The segment saw 25 new Cafe Mesra outlets opened during the fourth quarter of FY2022, bringing the total number of Cafe Mesra outlets to 41 stores.
PetDag also grew its convenience offering via Setel to include road tax renewal and payment to merchants and stores at the North-South Expressway rest and service areas.
Azrul said that eventually, retail offerings such as Cafe Mesra will hit economies of scale and be able to contribute a more significant proportion of profit.
“With our Cafe Mesra, we start to break even around the nine-month mark, even when that doesn’t happen we can relocate the unit as most components found in it, such as coffee machines, are easy to move,” he said.
Azrul emphasised that PetDag will still be focused on its core fuel business, which he believes has a long runway to go, while looking into diversification opportunities.
For FY2022, the group’s net profit jumped nearly 47% to RM776.6 million from RM529.75 million in FY2021, and revenue soared 62% to RM36.7 billion from RM22.7 billion.
The big jump in net profit was attributed to higher average selling prices and sales volumes for fuel following favourable price movements throughout the year.
The group’s cash balance amounted to RM2.88 billion as at end-2022, compared with RM1.7 billion on Sept 30, 2022.
At press time the nation’s biggest downstream petroleum product retailer’s share price slumped 0.44% or 10 sen to RM22.56, valuing it at RM22.41 billion.