Aeon expansion spree in S-E Asia

By Sharen Kaur

sharen@nstp.com.my

Published in NST in November 2, 2012

Aeon will be investing 30 billion yen (RM1.1 billion) to open its first stores in Vietnam, Indonesia and Cambodia by 2014.

Japan’s top supermarket operator Aeon Co Ltd will spend 300 billion yen (RM11.4 billion) to open 45 new stores in Southeast Asia by 2020, in addition to the 15 billion yen (RM572 million) to buy the Malaysian operations of France-based grocer Carrefour SA.

Aeon’s Asean business chief executive officer Nagahisa Oyama said the group will be investing 30 billion yen (RM1.1 billion) to open its first stores in Vietnam, Indonesia and Cambodia by
2014.

The 300 billion yen investment will be in stages and it will include renovating and rejuvenating the existing 55 Aeon stores and Carrefour hypermarkets under Aeon (Japan).

Aeon yesterday completed the acquisition of Magnificient Diagraph Sdn Bhd (MD), which owns Malaysia’s Carrefour hypermarkets.

MD will be renamed Aeon Big (M) Sdn Bhd and it will come under the purview of the Japanese company. The hypermarkets will be branded as Aeon BIG.

“For Aeon, the acquisition of Carrefour Malaysia provides the group with the opportunity to expand its existing roots in Malaysia and further develop its Asean operations,” Oyama said.

“We decided to explore growth opportunities in new areas in Southeast Asia as part of our expansion as we have full confidence that there is a growth market here,” he said at a media briefing yesterday.

Aeon is the third largest retailer here with 29 stores and its regional headquarters is based in Malaysia. As at end-2011, the stores generated RM2.6 billion in net retail revenue.

Carrefour Malaysia, meanwhile, is the fourth biggest retailer with 26 stores that generated sales of ?400 million (RM1.6 billion) in the 12 months to June 30 2012.

The acquisition of Carrefour Malaysia gives Aeon a spot as the country’s second largest retail group by sales.

However, Carrefour Malaysia is loss-making as it registered a net loss of RM81 milllion in 2011 from RM2.9 million in 2010 due to rising overheads.

“I believe the performance of Carrefour Malaysia can be turned around. The reason for the poor business in the past was because the management didn’t invest properly.

“We are drafting a three-year growth strategy that includes the opening of new stores and investing in existing outlets. We have no plans to shut down any stores. Instead, we will be pumping in money to uplift the business,” Oyama said.

On operating profits, Aeon is forecasting to achieve 15 billion yen to 17 billion yen (RM572 million to RM648 million) for its Asean operations this year, majority of which will come from Malaysia.

The group operates in Thailand, the Philippines, Vietnam, Indonesia and Cambodia mainly as a credit service provider.