Malta-based retail giant PG Group registered a €1.9 million (12.8 per cent) increase in pre-tax profit in the financial year ended 30th April 2022, in spite of mounting cost pressures. The results were published in its 2021-22 Annual Report on Thursday.

The surge in profit came after a rise of 13.6 per cent in turnover from the previous financial year’s figure, taking it up to €147 million. Revenues continued to soar despite home consumption of foodstuffs no longer being “augmented by an enforced isolation,” since no COVID-19 lockdowns were experienced during the timeframe, leading to a shift towards more people going to restaurants instead. Turnover in the group’s supermarkets increased by 8.9 per cent, resulting in a rise of 29 per cent over the last three years, exceeding PG Group's expectations "from two mature locations such as Pama and Pavi”.

Executive Director and CEO Charles Borg remarked that this has been “an important year” for the group, as it has not only managed the ongoing impact of the pandemic, “but we have also been looking forward to setting out our new multi-year performance framework and the strategic priorities that will help us deliver good results going forward”.

The group's non-food retail sectors experienced a steady period of expansion, with the Zara and Zara Home franchise operations recording a 42.7 per cent increase in turnover year-on-year.

As was the case in previous years, PG Group announced it would provide two interim dividends, resulting in a total net dividend of €5.85 million (€0.05 per share) compared to €5.2 million in the previous year.

One of its primary achievements for the financial year was the successful implementation of new core IT systems in its supermarket operations in May 2021, which was done through a “seamless transition that did not impact day-to-day operations, and was largely invisible to our clients”. “The new systems replaced old software that was at the end of its lifecycle and introduced a number of features and tools that assist the management and control of our operations. Above all, however, they are aimed at enhancing our clients’ experience,” Chairman John B Zarb explained.

It is also set to take a “major step forward” in the near future through the launch of a customer mobile app that will facilitate booking and queuing at specialist counters, as well as introduce price check and product locator facilities, among other features.

While the group has a positive outlook for the current financial year, with an “encouraging increase” in sales in the opening few months, “as with all businesses,” it is experiencing severe cost pressures across its operations. Its primary target for the coming year remains that of “repeating and possibly improving” on the results attained in the financial year ended 30th April 2022.

Mr Borg added that logistical problems leading to issues in getting products on time, as well as consistent price increases, are two challenges that have influenced the group’s performance this year. “Sourcing the right products at the right pricing is becoming our biggest challenge since suppliers are finding a lot of difficulty in sourcing raw materials, partly as a result of the war in Ukraine and the significant increase in the prices of fuel,” he explained.

“Much will depend of course on macroeconomic events that are beyond the group’s control. Global supply and logistical issues, the war in Ukraine and rising interest rates are all factors that will have a negative impact on disposable incomes,” Mr Zarb said.

While the effect this has on people's purchasing power has so far been reduced in Malta by the Government's decision to absorb the cost of rising energy prices, this may prove unsustainable "if the current energy crisis is a prolonged one".

“In situations such as these, shopping priorities and patterns will necessarily change. Having said this, our board remains confident on the group’s outlook in the years ahead,” with PG Group being “particularly well placed” to face a possible decline in consumer spending, offering “excellent value for money at affordable prices,” Mr Zarb added.

PG Group has grown to become a key player in Malta’s retail sector since it was set up in November 2016. Its business activities include Pavi (Qormi) and Pama (Mosta) supermarkets, Pama Shopping Mall in Mosta, as well as the franchise of Zara and Zara Home in Sliema and Mosta.