WITH the gradual reopening of the economy and resumption of business activities, Aeon Co (M) Bhd is optimistic of its prospects for this year.
In light of the brighter outlook, managing director and chief executive officer Shafie Shamsuddin says Aeon has set aside a capital expenditure of between RM200mil and RM300mil for 2022.
“This will be for the improvement of technology and refurbishment of our current assets like malls and stalls,” he tells StarBizWeek.
“We also have plans to open one new departmental store by October.
“We hope that we can do better than how we did in 2021. With the announcement from the government that there will be no more closures, we are optimistic.
“However, we also need to monitor the Covid situation closely. In January, cases were low and it was a good month. But the cases went up in February and everyone has become more cautious,” he said.
For its financial year ended Dec 31, 2021, Aeon’s net profit doubled to RM85.3mil from RM41.4mil in the preceding year, driven by better margins from improved purchasing strategies and enhanced negotiations, coupled with disciplined cost management.
Revenue in 2021 stood at RM3.63bil compared with RM4.05bil in the previous corresponding period.
Despite posting more than a 100% year-on-year surge in profits last year, Shafie says 2021 was indeed a tough period for the group. “Last year was equally challenging, if not more difficult than 2020. This was mainly because of the total number of days of closures for our non-essential businesses, as it was a lot higher than 2020.”
According to Shafie, non-essential businesses were forced to shut down for 119 days last year.
“Whether it’s our own retail or partners in our malls, that’s 33% of no business for the year.
“Also, in 2020, the movement control order (MCO) started in March and we still had Chinese New Year festivities to leverage on. But in 2021, the government implemented the MCO 2.0 from January to February.”
Comparatively, sentiment was affected a little differently in 2021 compared with 2020.
“When Covid hit, it was a panic. Last year, it wasn’t so much of a panic anymore. Instead, everyone was more cautious and prudent. People were more concerned about the lingering uncertainties – how long will it be? How will it impact myself, my family or my company?”
To remain sustainable during the height of the pandemic last year, Aeon had worked closely with all of its stakeholders.
“The Covid pandemic was a crisis for everyone. So we asked ourselves: ‘How can we be more proactive in being sustainable?’
“We have a large ecosystem. So we asked ourselves: ‘How do we leverage it and build synergies with our tenants, partners, consumers and employees?’”
In the midst of a crisis, it was important for Aeon to be able to “reflect, learn and grow”.
“We didn’t want to just focus on surviving ourself. In line with our ‘Aeon Sayap Bagimu’ sustainability initiative, we aimed to support the smaller enterprises, employees and other stakeholders and see if we can grow together.”In 2021, Shafie says Aeon brought in 400 suppliers comprising small enterprises.
“These suppliers produced around RM135mil worth of sales in a year and they were looking for a platform to sell their products.
“One of the small suppliers that worked with us. In 2019, it was making RM100,000 in sales. By 2021, it grew to RM1.1mil. It is proof that during the pandemic, we can grow if we really put our hands together.”
Additionally, Aeon also worked with the medium-sized suppliers.
“For the smaller businesses, their sales will range between RM100,000 and RM1mil, but for the medium-sized ones, they are between RM1mil and RM10mil per year for each supplier.
“We get about 100 of the medium-sized suppliers to help them grow. Their sales grew 40% from 2019 to 2021. We make the comparison with 2019 because it’s pre-pandemic.”
Growing the businesses of the suppliers also meant that their contributions would be greater, according to Shafie.
“The contributions of the medium-sized suppliers have also grown. In the past, they contributed 19% to us. But now, it’s grown to 28%.”
Additionally, Aeon saw the pandemic as an opportunity to reskill its employees.
“In the past, we were a bit more rigid in moving our employees to different departments.
“But during the pandemic and having to endure over 100 days of closure, we used it as an opportunity to retrain them because if we do not give them a chance to move, they may risk getting their salaries cut or be made redundant.”
Except for Aeon’s top management, Shafie says none of the group’s employees received salary cuts during the pandemic.
“There were 10 of us (in top management) whose salaries were cut at the beginning of 2020 for about nine months, until the end of 2020.”
Aeon raised the minimum wage for its employees to RM1,500 per month from RM1,200, effective Jan 1, this year.
“Ultimately, between 25% and 30% of our employees benefited from this increase in minimum wage,” he says.
Going forward, Shafie says Aeon will be looking to reduce the level of carbon emissions at its outlets nationwide.
“We have started with two malls, namely Aeon Taman Maluri and Aeon Alpha Angle, where we’re installing solar panels.”
The malls will collectively have 17,000 sq m of solar panels.
“Collectively, the malls will be able to generate a carbon emission reduction of 3,300 tonnes per annum. This is equivalent to driving a car for 13.3 million km, or savings of 1.7 million litres of petrol.”
Shafie says investments for the installation of the panels will be conducted with a partner.
“The total investments, with our partner, will be RM10mil for the panels for the two malls.
“Aeon Taman Maluri is completed, while Aeon Alpha Angle will be ready in April.”
Aeon is currently studying the possibility of installing solar panels at all of its malls nationwide.
“We have signed a memorandum of understanding to study the potential of installing solar panels on our 40 other malls and we aim to do it in less than two years,” he said.