With the anticipated more favorable business environment and the strengths of the Company including strong financial position, robust and efficient infrastructure, strong "MK" brand, and the management team with good operating experience under the COVID-19 restrictions, i am confident that the Company will be able to overcome the tough challenges and achieve a better operating result in 2021.
Mr. Rit Thirakomen
Chairman and Chief Executive Officer
In 2020, the Company faced the unprecedented pressure and challenges as a result of the COVID-19 pandemic. The COVID-19 was first detected in Wuhan, China in late 2019 and subsequently in March 2020, the World Health Organization declared COVID-19 a global pandemic as the virus spread rapidly worldwide. To contain the extensive and rapid spread of COVID-19, travel and mobility restrictions and lockdowns were implemented by most countries. Self-preventive practices, such as social distancing, mask-wearing, and frequent hand washing have also been strongly suggested and applied. These restrictions resulted in devastating impacts on the economy, including hospitality and tourism industries (e.g., airlines, hotels, and restaurants).
Thailand reported its f irst case of COVID-19 infection in January 2020. However, the number of infections surged in mid-March resulting from several transmission clusters, the largest of which occurred at Lumpinee boxing stadium. The spike and the wide spread of the virus prompted the government to take similar stringent actions as practiced in other countries in order to mitigate this public health crisis. These disease control measures and other mandated operational restrictions such as restriction on operating hours, restriction on seating capacity and temporary closure of restaurant stores, severely affected the business and operating results of the Company. Although the Company managed to make a net profit of Baht 340 million in the first quarter of 2020, the Company suffered a substantial loss of Baht 247 million in the second quarter of 2020 due largely to the mandated restaurant store closures f rom March 22 to May 16. The restaurant operating results were also impacted by the additional expenses related to the implementation of operational changes intended to comply with government requirements as well as to safeguard the health and safety of our employees and customers which are regarded as our top priority. They are also intended to increase customers’ confidence by providing a safe environment for customers to dine in our restaurants. These operational changes included increased cleaning and sanitization, installation of counter screens, and purchasing personal protective equipment. To alleviate the impact resulting from the temporary restaurant store closures and other restrictions, the Company adapted its marketing strategy to focus more heavily on selling through takeaway and delivery channels by collaborating with third party food delivery service providers. This strategy shift resulted in the strong increase in sales from these channels which helped to compensate partly for the sales loss due to restaurant store closures. Meanwhile, the Company took stricter action in the control of expenses particularly manpower and rental expenses by adjusting manpower allocation to meet the changing condition. The Company also negotiated with the property owners to seek rent reduction particularly for the period of restaurant closure. As result of the easing of the COVID-19 control measures by the government and the reopening of restaurant stores on May 17, the Company’s operating result recovered strongly from a second quarter loss to register a net profit of Baht 465 million in the third quarter of 2020. However, the operating result of the Company for the fourth quarter of 2020 suffered a setback again as it registered a lower net profit of Baht 349 million as compared to the previous quarter. This was due largely to a new outbreak occurred in mid-December resulting from a new transmission cluster linked to the central shrimp market in Samut Sakhon province. The new outbreak has since spread to other provinces.
In terms of financial performance for the fiscal year 2020, total revenue of the Company for the year 2020 amounted to Baht 13,622 million, down by 23.2 percent year on year. Net income for the year 2020 fell 65.1 percent year on year to Baht 907 million while earnings per share also dropped from Baht 2.83 per share for 2019 to Baht 0.99 per share for 2020.
With respect to COVID-19 related corporate social responsibility activities, I am pleased to inform you that the Company provided funding for medical projects related to COVID-19 and other assistances to the staff of hospitals during 2020 as follows:
- • Donated 100,000 surgical masks during the shortage period to Siriraj Hospital and Ramathibodi Hospital.
- • Provided joint funding for the research and development of COVID-19 rapid diagnostic tests to the Faculty of Medicine, Chulalongkorn University.
- • Provided joint funding for the construction of 6 negative pressure rooms and the related medical equipment to Ramathibodi Hospital.
- • Provided joint funding for the construction of 3 negative pressure rooms to Buddhachinaraj Hospital.
- • Provided research grant to the Center of Excellence in Clinical Virology, and funding for the procurement of real-time PCR thermal cycler to detect COVID-19 to Chulalongkorn Hospital, The Thai Red Cross Society.
- • Distributed free lunch boxes jointly with Aunty Thongkam Foundation for a total of 7,400 boxes per day for a period two months to the staffs of 35 hospitals and public health agencies in 22 provinces nationwide.
In view of the significant decrease in the Company’s net profit for the year 2020, the Board of Directors has thus resolved to recommend a decrease in a full year dividend of Baht 1.00 per share (2019: Baht 2.60). As an interim dividend of Baht 0.50 per share was already paid to shareholders, the final dividend of Baht 0.50 per share, subject to the approval of shareholders at the 2021 Annual General Meeting, will be paid to shareholders who are eligible to receive dividends on May 25, 2021.
Looking ahead, the Company will continue to face tough challenges in 2021 due to the occurrence of a new outbreak in mid-December 2020 and the future uncertainties related to COVID-19 pandemic. Furthermore, the Company’s operations will continue to be affected by the on-going restrictions and the customers’ lingering concern about their safety of dining in restaurants. However, in view of the government’s increasing efficiency in controlling the spread of the disease and the fact that a number of countries started to roll out anti-virus vaccinations including Thailand which planned to roll out its vaccinations in February 2021, it is expected that the COVID-19 situation will be brought under control soon which will lead to the relaxation or lifting of the disease control measures by the government. With this anticipated more favorable business environment and the strengths of the Company including strong financial position, robust and efficient infrastructure, strong “MK” brand, and the management team with good operating experience under the COVID-19 restrictions, I am confident that the Company will be able to overcome the tough challenges and achieve a better operating result in 2021.
Lastly, on behalf of the Board of Directors, I would like to take this opportunity to thank our shareholders, joint venture partners, suppliers, customers, and all other relevant parties for their continued support and trust. Especially, I would like to express my sincere gratitude to our employees for their dedication and concerted effort in overcoming the most challenging crisis in our company’s history.