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President Chain's fiscal report 'barely satisfactory'

President Chain Store Corp (統一超商), operator of the world's third-largest 7-Eleven franchise, yesterday reported a barely satisfactory financial report for last year while company officials stressed they will be active in disposing of several non-core businesses to boost profitability.

President Chain Store saw revenue of NT$80.9 billion (US$2.6 billion) last year, a slight increase of 4.2 percent from the previous year. Its net income dropped by 17 percent to stand at NT$3.05 billion with earnings per share of NT$3.33, the company's head of investor relations Wu Wen-chi (吳玟琪) said at an investor conference yesterday.

Wu defended the drop in net income, saying it is normal as its NT$3.5 billion expense in installing the second-generation "point-of-sale" (POS) system would be amortized for three years starting in August 2003, and the company's investment in Toppoly Optoelectronics Corp (統寶光電) allowed it to enjoy tax credits in 2003, Wu said.

The number of 7-Eleven outlets nationwide surged to 3,680 at the end of last year, snatching up a 46 percent market share. Maintaining an aggressive expansion strategy, the company plans to add 320 more outlets this year, but sales per store are expected to remain flat, company president Hsu Chung-jen (徐重仁) said.

Outside of its core business, President Chain Store also operates well-known branded outlets and services including the health and cosmetics chain Cosmed (康是美), Starbucks coffee shops, Japanese delivery service Takkyubin (宅急便), home furnishing store MUJI and pastry shop Mister Donut -- the last two of which were just introduced into Taiwan last year.

The strong performance by MUJI and Mister Donut, which already broke even in their first and second outlet, respectively, has further boosted the company's confidence in disposing of its non-retailing business to drive up profits, Hsu said.

The company has been eager to seek suitable buyers of its shares in President Securities Corp (統一證券), Uni-president Asset-Management Corp (統一投信) and Toppoly Optoelectronics Corp, according to Chief Financial Officer Fred Chen (陳福唐).

President Chain Store's shares rose 2.6 percent to close at NT$55.2 on the Taiwan Stock Exchange yesterday.

Meanwhile, on behalf of a consortium that includes three other companies, chairman of President Chain Kao Ching-yuan (高清愿) inked a deal with 18 banks yesterday to secure NT$6.78 billion in loans required to develop a "BOT" (build, operate and transfer) project in eastern Taipei.

The NT$9 billion hotel-restaurant-retail complex, which is slated to be finished in 2007, will be connected with the underground MRT Taipei City Hall Station, making it easier to entice crowds, Kao added.

Kao also disclosed that the new partner to develop the Uni-President Group's (統一集團) first department store near the MRT Taipei City Hall Station will be decided next month. President Chain Store, a subsidiary of Uni-President Group, holds a 5 percent stake in the department store project.

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