Good morning, everyone, and thank you for attending the DFI Retail Group 2024 full year results presentation. I'm Karen Chan, Investor Relations Director. Joining us today is Mr. Scott Price, Group Chief Executive, and Mr. Tom van der Lee, Group Chief Financial Officer, who will be providing remarks on our full year results, followed by a Q&A session. Today's presentation is being webcast in its entirety. In addition, the full text of our results announcement and slide presentation have been uploaded on the Investor Relations section of our website. Before we start, I would like to remind you of the following information to be provided during the presentation. The information about to be presented is for information purposes only, and is not intended to be investment advice for any person. There is no intention to invite for any dealings in any securities.
There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief, or current expectations with respect to DFI Retail Group's business and operation, market condition, et cetera. You are expressly advised not to rely on these forward-looking statements, as they are subjective views which are subject to risks and uncertainties. With that, I'll pass it over to Scott. Scott, please.
Thank you, Karen. Good morning, everyone. Pleasure to be with you here today to talk about our 2024 full year results. I just wanted to start off with a few key business highlights. I'll unpack quite a bit of this in more detail as we progress through just a review of our strategy and our current format performance. Overall macro, we're a business that's balanced between North Asia and Southeast Asia, gravity towards North Asia. We clearly see some northbound consumption, in particular cross-border from Hong Kong into China. We estimate roughly 5.5 meals a month have moved across the border, generally dining out, much less grocery coming back into Hong Kong. We think that we're balancing that, and in fact, saw growth in our food business in Q4. So I think that we're cycling that. A lot of competition from Chinese digital players.
I think as one prepares for a broader, greater Bay Area type of strategy, we're ensuring that we are set for success in Hong Kong as more and more customers can shop across the border. That's two way. We believe there's some very attractive items that we sell that do well across the border in China. A number of steps taken to improve our profitability in 2024. Worked hard on cost savings. We very much applied to the everyday low cost mindset, including across our overhead. We expanded our margin from 1.7% to 2.3% between 2023 and 2024, and saw our digital business turn to profitability. Driving own brand, there is a flight to value. Customers across the region are concerned, and we see it in their buying behavior.
For example, in the month of December in Hong Kong Food, although the total basket was basically flat in terms of number of items in the basket, the value per item went down by roughly 3%, and that is down trading. What it means is that our own brand margin, which is actually quite healthy, higher than national brand benefits as customers trade down into the Meadows brands and other parts of our own brand portfolio. We are still optimistic in terms of 2025. There are concerns around, well, what does it all mean? My team well knows, I say, people are still going to eat, they are still going to shower, they are still going to drink coffee. I think we are set with the right assortment. We think we will continue to gain share in 2025 across our Hong Kong businesses, including restaurants.
Capturing growth in health and beauty and convenience, and we will talk a little bit more about that. Ongoing cost optimization. We constantly focus on reducing our cost to serve our customers. We see franchise as an opportunity not only to continue growing, for example, 7-Eleven in South China, but expanding our franchises now into our health and beauty portfolio format, and are looking at a couple of Southeast Asia markets where we think we can accelerate growth through franchise. Leveraging data. We have a very powerful yuu membership base of 5.3 million customers shop every single day, earning points. That data is now helping us not only be a better operator, but we think also offers opportunities for monetization of that data with our vendor base.
We are continuing to expand our omni-channel presence, and I will talk in a few slides a little bit more about what we accomplished in 2024. But before we get to that part, I would like to turn it over to Tom, who is now going to take you through the financials.
Thank you, Scott. I will take you through the financials. A really strong year despite the macro backdrop. The underlying profit of $ 201 million is up 30% year-on-year, driven by the profit improvement for food and convenience. The reported profit is impacted by one-offs, mostly non-cash. Subsidiary sales down 0.6%, excluding divestments and cigarette sales. This is a resilient performance given the macroeconomic backdrop and is driven by market share gains and benefit from a diversified retail portfolio. Strong health and beauty performance despite challenging market conditions. Convenience delivered double-digit PBIT growth across markets driven by strong pay to eat, offsetting the decline in lower margin cigarette volumes. Strong profit growth in food driven by significant earnings recovery in Singapore. Strength in Taiwan IKEA, plus cost savings, mitigating sales challenges in IKEA Hong Kong and Indonesia.
Strong e-commerce volume growth with profitability turnaround, an important milestone for us. Expanding the yuu partnership with encouraging sales momentum in retail media and continued net debt reduction. After the completion of the Yonghui transaction, we are now in positive net cash position. Turning on to revenue and underlying profit. The total revenue, including associates and joint ventures, is $ 24.9 billion. It is down 6% year-on-year. Excluding Yonghui and the divestments, we are down 2% year-on-year. Subsidiaries, $ 8.9 billion, down 3%. Again, excluding divestments, we are down 2%. Subsidiaries underlying profit before IFRS 16 is $248 million, up 17% against last year, underpinned by strong profit growth in food and convenience, partially offset by weakness in home furnishing. Subsidiary underlying profit of $158 million, up 42%, and the share of associates and joint ventures, $43 million, marginally down 2%.
Lower contribution from Maxim's, partially offset by reduced losses in Yonghui and profit growth in Robinsons Retail. The underlying profit to shareholders is $201 million, up 30% year-on-year and in line with our guidance. If you exclude the Yonghui and the divestments, the profit is $234 million last year, up 17%. The net non-trading items, a loss of $445 million, which I will elaborate on a bit later, and that result in the reported loss of $245 million. Underlying EPS, $ 14.91, up 30%, and the total dividend per share for the year, $0.1050, also up 31%. This demonstrated our commitment to drive sustainable improved shareholder returns.
If I move on to the net non-trading items of $445 million, the key one is largely driven by $231 million impairment of our interest in Robinsons Retail, $133 million goodwill impairments for our Macau and Cambodia food businesses, and $114 million fair value loss related to our Yonghui divestment. This is partially offset by gain from divestment of Singapore property assets and the group share of the one-off gain from Robinsons' investments in BPI Bank. We do not foresee any material non-trading items adjustments in the near future. Moving on to revenue. The total revenue, $ 8.9 billion, is down 3% year-on-year. Like-for-like, excluding cigarette sales, is down 1%. On Health & Beauty, the total sales is $ 2.5 billion. It is up 1% year-on-year and flat like-for-like.
Hong Kong Mannings sales is impacted by very strong comparables due to a consumption voucher in 2023. Southeast Asia continued to outperform, led by strong performance in Indonesia. On convenience, $ 2.4 billion, down 3%. Again, if you exclude cigarettes, it is up like-for-like 2%. Strong ready-to-eat performance across all our markets. Food, $ 3.1 billion, down 5%, and like-for-like down 2% year-on-year. The food consumption is impacted by increased outbound travel of Hong Kong residents into Chinese mainland throughout 2024, but it became normalized in Q4, a welcome return to a positive LFL growth in quarter four. Home furnishing, $ 701 million, down 12% year-on-year. Hong Kong and Indonesia sales are affected by intense competition. Taiwan, though, is relatively strong. Moving on to the key associates, Maxim's, $ 3 billion, marginally down 1% year-on-year.
Weaker mooncake sales and restaurant performance in China mainland were partially offset by resilient business in Hong Kong and continued growth in Southeast Asia. Robinsons Retail, $ 3.4 billion, flat year-on-year, and Yonghui, $ 9.5 billion, down 11% year-on-year due to continued macro headwinds and intense competition in China. Moving on to the subsidiaries operating profit of $343 million. At the beginning of the second half of 2024, our own brand and e-commerce costs were moved from SG&A to the food and the H&B format. We have a restatement in 2024, and therefore we also restated our 2023 numbers to make numbers comparable. My comment will be against the restated column of 2023. Starting with Health & Beauty, $211 million profit, up $ 3 million year-on-year or 2%. Both Hong Kong and Southeast Asia increased profit.
Convenience, a record profit of $ 102 million, up $14 million year-on-year, driven by margin improvements across all markets as a result of a much better mix. Food, $58 million, $27 million improvement year-on-year. Significant earnings recovery in Southeast Asia, with Singapore Food turning profitable, as well as improvements in our e-commerce. Home furnishing, $60 million, down $3 million year-on-year. The sales shortfall, which I shared earlier, is partially offset by significant cost savings in IKEA. SG&A, under $39 million. That is up $5 million year-on-year, largely due to higher IT costs, which are partially offset by savings in digital.
That leaves an operating profit of $ 248 million, up $36 million year-on-year, and an IFRS 16 adjustment of $ 95 million, and a total operating profit of $343 million, up $49 million year-on-year, which is 3.9% of sales and a 70 basis points improvement. Cash flow. Our operating cash flow is $331 million, slightly down again in 2023, mainly due to a decline in working capital as a result of the timing of the year end. Our CapEx, under $72 million, down $25 million year-on-year due to disciplined capital allocation. The free capital, $158 million. Divestments of $107 million, that mainly relates to property divestments. We have sold property in Taiwan, Singapore and Indonesia. You can see the dividends paid, $114 million, leaving a net cash flow of $115 million. Net debt at the end of last year is $468 million.
Again, an improvement of $158 million. Today, we are in a net cash position after the completion of the sale of Yonghui. I will pass the time back to Scott for strategy and business update.
Thanks, Tom. I would like to just start briefly sharing the recently launched DFI purpose statement, "Sustainably serve Asia for generations with everyday moments." I make the effort to share this for two reasons. The first being that it is very clear what our business is and what we exist for. As we think about where we are divesting and where we are investing, this very much is a North Star. The second is it is an important part of our employer proposition. More and more, it is a war for talent out there. Having a purpose statement is a compelling part of bringing on this next generation, research has shown. I share that with the view that we are continuing to modernize non-financial aspects of our business. Our strategy statement, we shared this a year ago. It is unchanged. Customer first. People led. Shareholder driven.
It is an anchoring framework for how we are managing the business. Unpacked in a little bit more detail. The first is leveraging data to drive food margin improvement. As I mentioned before, yuu brings us very powerful knowledge of our customer base. As a result, we are now able to leverage an AI platform to use that data to help drive category. We have done relaunches and resets across many of our categories, where we put in front of our customers a more compelling assortment, but importantly, margin optimized for our business. We continue to see the ability to offer better prices to our customers while also increasing our margins. Our own brand was reset. We had, I think, a strategy around SKU expansion.
We have pivoted that now to a margin focus, with the clear idea that we need to be able to offer at least a 10% price discount to the national brand on a comparable, but yet at a higher margin, which is a very important North Star, as I would call it, to that business. As I mentioned, we are up to nearly a 10% penetration, for example, in our food business. Our customers are very much appreciative of the role that the private brands play in their basket. Ramping up data monetization, we have got the opportunity to leverage that yuu data. Our vendors are very keen to understand how they are performing versus competition. We can now do that through our program, and as well, how we can use our AI and that data to be able to help them run much more effective promotions.
All of those are more, in terms of the vendor, value accretive to them, and therefore they are willing to pay us for that. We launched our retail media platform. We see substantial ad revenue into the future as we not only monetize the yuu platform in terms of displaying advertisement, but also in store. We have thousands of stores with obviously a higher quality eyeball in front. A customer in the beverage aisle in one of our food stores is a far more effective, I think, advertisement to a beverage company, for example, than maybe some of the more generic platforms. We continue to see this as a big opportunity. Expanded the yuu partnership. We continue to create opportunities to earn points across everyday life here in Hong Kong in this example.
Recently, against a lot of very long well-known brands, yuu was ranked by Kantar as the number one brand in Hong Kong, ahead of many well-known, say, airline brands, insurance company brands, Octopus, MTR. Very pleased with the efforts by that team. Then we are accelerating our omni-channel presence. We now have 58,000 daily orders across our business in terms of e-commerce transactions that are done digitally. If we move on to people-led, we are a people business. Every one of our 20 million customers interact with a frontline team member. Therefore, how we establish a culture that ensures that we are customer-focused. So we implemented an organizational restructure that reduced overhead cost at the top, moving decision-making much closer into the business. We had, I think, over-centralized. That localization means not only, I think, better assortment decisions for customers, but a lower cost of overhead.
We have focused very much upon leadership and our succession of our leadership, understanding our customer, and therefore a higher proportion of local talent within our succession. We have put quite a significant effort into training and development into our business, and reset through digital platforms our ability to deliver that training. We relaunched our executive incentive. It is now fully aligned to shareholder interests. It is driven by a relative TSR in terms of stock price appreciation, as well as a return on capital employed or ROCE metric. Those two, I think, very well aligned to shareholders. Moving on to shareholder-driven. Very disciplined CapEx investment. We will continue to ensure that we invest our capital to a much higher ROCE level of hurdle rate. Improving our efficiency, so we really only want capital where it matters, and therefore, property monetization.
When that property is with a store that is a good store, we do a sale leaseback mechanism to ensure that we continue to operate and bring free cash flow into the business. Our net debt, Tom touched on, we are now net cash positive at the end of February with the proceeds from the Yonghui sale landing in our bank. Total dividend up 31%, and continue to see this dividend opportunity for growth as an important part of our proposition to shareholders. As mentioned, the divestments took place in 2024, and we continue to assess opportunities. Again, TSR, ROCE focused. We will look at inorganic acquisitions, but also divestments that align with that strategy. Onto the formats. Just touching briefly. First, I will start with health and beauty. Very pleased with the performance.
It was quite a challenging year for the health and beauty across our markets, with a number of cross-border changes. The first being a little bit more traffic going north, but importantly, a very different tourist profile. Having said that, we did very well in terms of balancing, and therefore overall, our like-for-like or same-store sales was flat in 2024 between North Asia and Southeast Asia. Profit is stable due to quite disciplined cost control by the team. Overall, though, in Southeast Asia, markets that we are focused upon in terms of growth, we had a same-store sale increase of 4%, which is not only from just market share gains, but also increased basket size. So one more item in the basket being an important part of our commercial proposition. A very strong performance in our Indonesia business. Double-digit growth in both like-for-like and PBIT.
We're expanding into PharmaCare program in Hong Kong. Pleased with the initial results there as we continue to drive share gain in an area of expanding importance. As the population ages, interest in health increases. We're also following upon the success of our food business, resetting the own brand strategy across the H&B format. As you visit our stores, both Mannings and Guardian, you will see a difference in terms of how we are portraying own brand. Again, same strategy, a 10% minimum price reduction versus a national brand with a better margin for our business. We opened 73 new stores, most of those in Southeast Asia. We continued to increase our e-commerce proposition. I'll talk a bit more in a few slides where you would have seen those new apps. Onto the convenience. Overall, excluding cigarettes, we had a like-for-like sales growth of 2%.
Our main market for 7-Eleven had a pretty substantial change in tobacco tax. Given the scope and size of our business, it had a bit of a revenue impact as behavior changed. However, highest ever profits delivered by the overall CVS business, so up 17%. Importantly, a 10% growth in our ready-to-eat, RTE, assortment, which is substantially more profitable than tobacco. So we are more than happy to migrate tobacco revenue over to ready-to-eat revenue. That penetration of RTE reached 23%. We are on the right side of that flight to value by customers as they downgrade their purchases from sit-in restaurants or casual dining. We're offering great bundled meals for both breakfast, lunch, and dinner across a great assortment that I think is quite compelling. As a result, very pleased with the growth that we've seen in RTE. The QSR industry, yes, we have a business.
Obviously, Maxim's, 2,000 stores across the region. We have a great internal competition between the teams. The net of the two, I think, are beating the market. So QSRs overall taking a bit of a hit. Our Maxim's business, roughly flat as we went into Q4. They've normalized and stabilized and continue to grow share across their business, which I think is a great sign, as they also pivot towards value proposition within their menus. We launched a new 7-Eleven app, and within weeks had 30,000 daily active users, which again, I think reflects on the power not only of the brand, but our assortment and our RTE and coffee proposition. Continued expansion in Southern China with 103 new stores net opening in FY 2024, an area we see for much more growth in the coming years. Growing franchisee as a percent of our total stores.
Other people's capital that drives a much better profitability for us out of that format. Moving on to food. Quite a strong year. The growth driven by not only the improved sales mix across our categories, but very strong control costs. Total food sales in Hong Kong returned to growth in fourth quarter, so I think we're cycling this balance of consumers willing to make the effort to grow across the border. I think the faddish nature of that has stabilized, and we see that in Q4 in terms of our Hong Kong sales. Market share gain. If you think about totals food, despite the ubiquity of a Wellcome store everywhere, we're only at 19% market share when you think about wet markets and our competitors. Therefore, a lot of upside for us to continue to drive traffic and sales density through our stores in Hong Kong.
Singapore business, an outstanding job of turning around into profitability overall after multi-year losses, and very pleased with the state of the business as it stands today. Double-digit growth across Hong Kong and Singapore in e-commerce. We are now profit accretive. E-commerce traditionally being dilutive or loss-making. But we have through our ecosystem, through platform sales, as well, our focus upon data and media monetization are now profitable on our e-commerce channel overall across all of the DFI platforms. Own brand, also, as I mentioned, an important part of driving profitability. As mentioned, the Indonesia food business was exited. Home furnishing, probably the most disrupted format in terms of, I think as customers move much more to being very careful. Large Home renovations, large-scale furniture, bathroom, kitchen renovations are put a bit on the back burner and focus much more around what you would call consumables or marketplace.
As a result, the team has adapted to this. We do see some competition from the Chinese mainland digital platform. We are focusing on our strengths. We have great quality. We land net cost delivered to a home at, in many instances, a lower cost than some of these platforms versus the headline price when you get down into the fine print and get it to your home.
So we are focusing on our strengths traditionally there, you are talking decades of design and quality excellence, but we are focusing on how do we offer other aspects of that assortment that are value-focused to make people feel good about their homes. Also growing our food. It is quite interesting. There is quite an affinity for some of the hero items of an IKEA food and continue to sell those.
Taiwan had really good performance, a 10% margin in that business, quite protected compared to some of our other markets. Indonesia, we are driving sales through increased local sourcing and getting support from the franchisor as they build up export of those items to other IKEA markets around the world. A good growth, we now have 14% of revenue in e-commerce, which is quite stable. Ongoing cost optimization, quite a bit of effort to ensure we protect margin by reducing our costs, and much more of a value-driven omni-channel proposition across our assortment. As I mentioned, food proposition, for those anywhere near an IKEA, go in and see the food. It is not only unique, but it tastes great. Moving on to omni-channel, which I mentioned, yuu is the center of our overall digital proposition. We also have yuu in Singapore.
On the left side, we are offering customers an opportunity to shop across all of our banners in all of our markets with the named app. So you see that we launched a number of new apps in 2024 across Guardian, Mannings, 7-Eleven, and are seeing great uptake. As I mentioned, 54,000 orders a day. That is not all through the direct distribution. It is also coming on the right side, which is the expansion in third-party platforms. The net of this ecosystem, plus, as I mentioned, the media and data monetization means that our overall omni-channel proposition is now profitable. In terms of yuu, a bit more detail. As I mentioned, in Hong Kong, 5.3 million members, 3 million of them are active monthly. Over 1.8 million in Singapore.
Overall, we are continuing to drive yuu as a daily partner for customers to earn points and then burn those points and create that sense of incremental value at a time when customers are very concerned with cost of living. On the retail media, launched at the early part of last year, and now 100 marketing campaigns in terms of working with our vendors and executing programs across the business with a great return on spend for those vendors. Therefore, continue to see demand for our channels as we expand them into much more screens and stores in terms of the growth of that in-store market. Retail analytics is both two aspects. One, how do we operate better through the AI platforms I mentioned, using data analytics and ensuring we have a great assortment with margin optimization for DFI. 14 of our categories were reset with outstanding results.
We are now rolling this out across the rest of the business in H&B and as well in convenience. Then that data is also a mechanism by which we are able to monetize with our vendors. In terms of this media you see here, there is now a number of large-scale business cases of success around the world. I think that we are potentially a little bit late to the game, but see ourselves as being a pretty strong first in Asia. We have a unique fragmented business across Asia retail. Therefore, I think there is quite an interesting way that our business, which is DFIQ. I am not sure if I was allowed to announce that or not. It may be a sneak peek.
We just branded our media platform, DFIQ, isn't that powerful, as the platform by which our vendors can access not only our advertising on the yuu app, but across all of the store screens. I see thousands of screens in our future, so that as customers shop, they get, I think, an opportunity to engage with brands, not only through promotions, but new product launches, et cetera, while they are in the shopping mission. So see this overall approach as being something that is unique in this part of the world, but follows upon some really great best practices you see in North America, Europe, and Australia. With that, I am going to turn it over to Tom, who is going to give a business outlook.
Thank you, Scott. Let me finish with the business outlook for 2025. I said earlier, we are encouraged by the relative resilience our business has demonstrated in 2024 with a stronger value proposition, expanded omni-channel presence and disciplined cost control. While challenges remain, we are cautiously optimistic with respect to the outlook for 2025. We expect revenues to grow by approximately 2%, underlying profit to be between $ 230million and $ 270 million, implying a 25% growth at the midpoint. We expect CapEx to be between $200 million - $220 million for 2025. That is broadly in line with historical trends. CapEx will be primarily focused on opening stores in growth markets, developing IT and digital, investing in sustainability, and enhancing our supply chain capabilities.
We achieved a net cash position post the completion of Yonghui in February 2025, and we continue to reinvest in growth markets, improve returns through earnings and dividend growth. We will now move on to our question and answer session. Karen, please go ahead.
Thank you, Scott and Tom. With that, we will open up the floor for Q&A. If you wish to ask a question, please raise your hand and we will have someone to assist you. We kindly ask you to please indicate your name and the name of the company you represent. For those participating online, you may submit your question on the platform, and we will direct them to our speakers. Jeffrey?
Hi, Scott. Hi, Tom. How are you? This is Jeff from CLSA. Congrats for the good results. I have two questions. The first one is regarding the 2% organic revenue growth target this year. Can you help us unpack this a bit, on what are your assumptions or what sort of environment that you are looking at? My second question is, Scott, you were in Bloomberg this morning. You shared briefly about the M&A strategy. Just trying to understand a bit what sort of business you might be looking at, and are we urgent on that front? Thank you.
Why don't you cover revenue, Tom?
Yeah. On our 2% organic growth markets, we see Hong Kong stabilizing. I said earlier, Q4 Wellcome was a positive like-for-like growth. We see continued growth in our growth markets in Southeast Asia, mainly Indonesia and Malaysia, as well as South China for convenience. That underpins broadly the 2% growth for 2025.
In terms of inorganic growth, I think you could be confident in expecting, if we were to make a transaction, it would be within our existing formats. Initially, our focus is on existing markets, where we are able to expand our share. Our focus for now, H&B and convenience, where appropriate. I think importantly, nothing done unless it's TSR and ROCE accretive. I use the statement that we are pivoting from a portfolio company to an operating company. I don't see minority shareholdings as being an important part of our proposition moving forward. In general, you put your TSR in someone else's hands, and I'm too much of a control freak for that. We will continue to ensure that a growth is within our existing business. Again, TSR and ROCE accretive.
Any question from the call? Anne?
Hello, this is Anne from Jefferies. A little bit more questions regarding the top line, the 2% growth. I presume it's mainly volume. Maybe, you can share a little bit more about what is the assumption in terms of the ASP, and volume. That's the first question. Second question is on the core operating profit, that you are expecting a much higher growth. I see that, for year 2024, majority of the earnings is actually from the health and beauty side. My question is where is this year 2025 profit growth coming from, by segment? Should we continue to focus on where we are good at, which is on the health and beauty side, or there are other rooms for improvement in terms of food and also for the convenience store in terms of the operating margin.
Some sharing in terms of how that profit growth is coming out from by segment, that would be great and by region as well. Thank you.
Yeah. Let me talk a little bit on revenue, and I will turn it to Tom on operating profit. I think there are going to be three core drivers of revenue growth in 2025. The first is transactions via market share gain. We continue to see across all three core formats, that are daily consumables, an increase in market share in 2024, see it again in 2025. Believe across food, convenience, and health and beauty, that transaction increase. I see that the value per item will have stabilized, as the downgrading behavior has increased. We now have a pretty good assortment. The reality is, there is a lot of noise in today's markets around the impact of tariff and what does that do. You look at sort of the items that we import across, say, our Hong Kong business.
There is a couple of produce items, but we are not dependent. Pre-COVID, we generally sourced from 25 countries. We now source from 53 countries. If American apples become too expensive for our customers, they can pivot to China or New Zealand apples, which would be a greater value. I think we are pretty well protected in terms of value per item. The third to me is the ability to drive some of the media monetization and the ability to increase sales per square foot through incremental revenue beyond just our standard assortment. See continued progress as we think about bringing forward media monetization. Relative to North Asia versus Southeast Asia, I think you are going to see by format, I believe, across IKEA, we are stabilizing. I see upside in health and beauty, and as well, convenience.
I think our food businesses will continue to see a bit of deflation in Hong Kong, but think we are offsetting that with market share gain. I think our Southeast Asia business for food is pretty stable as well as growth. Look, 2% is market share gaining, but pretty confident that we have the right construct across our format mix to deliver it. In terms of how profit flows from that.
Yeah. On profit growth for next year, I think one key element is the divestment of Yonghui. Yonghui was loss-making 2024 and prior years. That will help us to grow profit. That is one. That is an important one. Secondly, if you look at the key segments, H&B, convenience, they remain the most important ones. Other formats will also grow, but the growth in stores, the expansion of stores will be in H&B, Indonesia and Malaysia, as well as convenience in South China. As we grow stores profitably, we will see that those two formats will grow faster in profit than the other two formats.
I think, John, you have a question.
Thank you. This is John Lam from UBS. May I have three questions here? First of all, how do you see about the rental expenses in 2025? The second one is about, how do you balance the relationship with your suppliers, with the private label being launched? I see you have been very successful in terms of launching the private label. The third one is about, regarding on the Chinese mainland competitors, they are also expanding, not just online, but also offline. For example, Taobao is also opening store in Hong Kong and also some of the low-cost operator, they are also trying to open in Hong Kong as well. Not sure how you think about the dynamics, not just online, but also offline. Thank you.
Why don't you cover the first, rental?
In the rental, in 2024, we saw rents decreasing in Hong Kong. They were up in Singapore, but they were down in Hong Kong. We do not expect rents to increase this year. So flat and potentially even downwards again, given the market, the circumstances.
On the own brand, your second question. We want good relations with our vendors and the national global brands, but we are the advocates for our customers. Our customers are, I think, deserving of a right to choose. Therefore, I think if you look at any major competitive food market in the world, there is a good, solid own brand proposition. I do not think our national or global vendors are surprised by it. I think it keeps them on their toes, and it creates a little bit of competition in category, which is always a good thing. In terms of your third question. You said two, you added three, and I forget the third. What is the third question?
The Chinese operators.
Look, I think that there continues to be a need for us to be prepared for operations in China, much like we see a lot of tourists coming to Hong Kong and buying to take home. So it is a two-way in terms of unique assortment on either side. On Taobao, we have been to the Taobao store. We have looked at the Taobao store. I do not think we should ever ignore them, but our proposition is different. We have, I think, a design excellence that has been proven over decades as a very globally impactful approach. I think that our quality, and as I mentioned, our net delivery cost once you all add it up, and we are seeing some social media that is now talking about the differences between specific items and the fact that the IKEA brand has competed and done well over 60 years for a reason.
We continue to keep an eye. We are reacting. We are educating customers in terms of the true net cost and quality delivered into their homes. As I mentioned, we are reinforcing specific items in our assortment that we think are of great value. As you walk through, you will see a lot of really well-designed items at a great value that, to me, I think, signals the fact that we have stabilized. Once interest rates come down, you start seeing home buying go back up at a significant level, then other aspects of, I think, the IKEA business will go back to revenue growth.
Karthik?
Yeah. Hi, Karthik here from Indus Capital. I have three questions. The first one is, if we look across formats, we have outlined a number of initiatives which are margin accretive, right? For example, let us say our partnership with foodpanda for Wellcome, which is accelerating our e-commerce sales or our RTE penetration in convenience stores. When I look at all those initiatives, and when I look at the margin outcome, it seems we have not yet derived full value of those initiatives yet. My question is, where are we in that margin journey when it comes to, let us say, food or CVS? Are we in the very early stages that there is a lot more scope now as we reap the benefits of these initiatives, or are we somewhere in the middle? Any qualitative or quantitative color would actually be very useful.
My second question is, if we look at our CapEx spending of about $ 200 million -$ 220 million, that is a reasonable step up from 2024 levels, although Tom did indicate it is in line with historical averages. My question is, if we were to break that CapEx up, what percentage would you attribute to revenue enhancing versus margin enhancing? My third question is, it looks like for the H&B business, China is still undergoing some level of store and channel rationalization, pivoting more towards online, and we are rationalizing majority of our stores. Where are we in that journey? Should we expect any other margin impact to this exercise in 2025? These are my three questions.
Yeah, let me cover the format question. I am not ready yet to host an investors conference where we could lay out a multi-year view as to by format, where growth and where margin optimization. I would say that 2023 net margin of 1.7 PBIT, 2.3 in 2024. We are guiding to obviously margin increase in 2025. Clearly there is upside, relative to our overall margin. How I see the mix amongst the five businesses of food, convenience, H&B, home furnishing and Maxim's, we still have some work to do, including, as I mentioned earlier, potential looks at inorganic. At some point, we will be ready to guide. For now, I think I am comfortable committing to that margin increase in 2025 with that 230 to 270 range on the bottom line on a 2% revenue. In terms of CapEx, Tom?
Yeah, on CapEx, as I said, it is in line with the historical average. If you look at where we spent the CapEx on, it is a balance. We spent partly on supply chain efficiencies to get our cost down to operate, on our tech infra, but also on store expansions. And those are only in markets where we see returns. If you see store expansion, it is mostly in South China 7-Eleven, Indonesia health and beauty, and Malaysia health and beauty. There we expand and build new stores. In addition, we are also investing in our convenience stores in Hong Kong to accelerate and expand the ready-to-eat offer. The hot shot counters require quite a lot of capital investments, and those we are investing in to make sure we can grow RTE and improve the margin in convenience.
On the H&B question, that is a good one, and I think it is a great example of our strategy when implemented results in a higher TSR ROCE. Customer first, as we understand what a Mannings assortment means to the average China customer, it became very clear to us they did not need to shop stores. As you thought about stores helping us, it meant that from 100 stores to get the scale value of brick-and-mortar business, we needed 1,000. Or we downsize to a minimum number of stores as a bit of showrooms and drive a much more digital proposition. That has a higher ROCE for the business. Therefore, we closed a significant number of stores in China, and we are pivoting towards a digital proposition. A lot of China customers, mainland China tourists come through and are customers.
We have a large number of our stores we classify as tourist stores. If you look at that assortment, you see significant SKUs or items that are loaded up on shelves, and it is because we are selling massive numbers of them. There is a lot of learning there in terms of what we can sell domestically in China that we think is a much better margin and return on capital proposition. So, I am not negative on H&B in China. We have just pivoted that strategy to be much more, I think, sustained in terms of the economics for our overall business.
Brian?
Hi, Tom. Hi, Scott. This is Brian from Citigroup. My question is regarding the convenience stores in South China. Since our growth driver would be in the store opening and as well as the ready-to-eat segment, could you share with us this year's target, for the store opening and also in the long term, as well as, for the ready-to-eat category, what are our main competition in that? Thank you.
Yep. I am very optimistic around the South China, the Guangdong province, where we have the franchise rights. We have roughly 1,800 stores today, and see quite a bit of upside in terms of in the long term, thousands more. I am not ready yet, much like the earlier comment, to give any sort of guidance commitment over the next three to five years. We have some more work to do. As we open the new stores, we are focusing on what we call a food bar. What we have learned, and it is a big, interesting sort of consumer behavior. It seems like every third person now goes to Japan twice a year. They go to the 7-Elevens in Japan, and they love the ready-to-eat. A lot of that is cold food, sandwiches and onigiri, et cetera.
W hen they go home to Guangdong, they want a hot meal. What we have learned is that we have had to pivot our assortment. This food bar is basically the China version of a 7-Eleven Japan, with a much stronger hot food proposition than we would have in any of our other markets. That has taken off. We are seeing a very significant growth, mainly because of the fact that it is perceived as a value meal. Versus all the other options in China right now, and there is a consumer that is being very careful with their money, they are seeing that the food bar of 7-Eleven is a very powerful proposition. We are retrofitting many of our stores to have a substantially larger proposition around that food bar. As we grow new stores, see that as being an important point of differentiation and competition.
To the extent of how many stores and what percent food bar, need a little bit more time before we are ready to make those commitments.
Thank you.
All right. We got a very enthusiastic crowd here today, but let's move on to online for the last couple minutes of the presentation. [Meg] from CGSI Singapore, she has three questions here. First, what are the key drivers that would bring your profit towards the higher end of your guidance? Second question, that's about the thought on use of proceeds from Yonghui. Third, DFI has taken impairments on its businesses in Macau, Cambodia in 2024, and Philippines. So what are the key areas of your operational review going forward?
In terms of drivers of profit, the reason you guide on a range is that no one can predict the macroeconomic environment. I think that is the key driver relative to lower end of the range or higher end of the range. I think that the current environment is a bit extreme. We are a couple of weeks into a new administration and this concept of tariffs. I think my philosophy is we should all just keep calm, carry on. The great thing about our business is that, as I mentioned earlier, customers have to eat. They'll still shower. They'll still drink coffee. They still want a new pillow every couple of years. Not forgetting our home furnishing and love some of the value meals in our Chinese restaurants.
I think consumer confidence will decide whether or not we see a pivot towards higher value items, et cetera, that would drive to the upper end of it. In terms of the Yonghui proceeds, I think Tom would agree that debt down, and the net cash position that we now sit reflects that. In terms of your third question on impairments, Tom, the manager of the balance sheet, what have you say?
I think on the impairments, we've just like every other impairment tests on the Yonghui, as well as San Miu and Robinsons Retail shares, and that came to reduction of the carrying value, therefore the impairment. We don't expect any more other non-trading items in the near term future. We always look at the portfolio constantly, as Scott said, on ROCE, on TSR, but it will not and should not result in any non-trading items.
Okay. Due to the interest of time, we will be taking the last question online from Joseph Lin of Highwest Global. We noticed recent headline of online shopping platform in ASEAN putting out quite a robust GMV growth target in 2025, which will further increase the e-commerce penetration rate in the market. As an offline retailer, does DFI view ASEAN still an attractive market to spend more resources to grow? Or does the company plan to have a more balanced approach in Southeast Asia? Thank you.
Our customers, I call them omni-channel customers, which is that they want to not only shop our stores, but they want the convenience of purchasing online as well. Frankly, we are focused upon fair share. We know who those customers are. We know what their interests are in terms of the digital and the e-commerce transactions, and we are making sure that we keep up. We are not attempting to become a powerful pure play. Frankly, I do not find the economics from a TSR ROCE as attractive than the balanced approach that we are taking today. Absolutely, ASEAN, Southeast Asia, we have aggressively moved to ensure that we have the apps, we have the fulfillment capability, we have delivery partners. We are putting that assortment online. We are ensuring that we have loyalty programs in place. We are motivating customers to earn points with us.
We are not going to overinvest. I would suggest that maybe two years ago was a learning for us in terms of the expense of doing that. I do not think it is necessary.
Thank you very much, Scott. Ladies and gentlemen, this would conclude our session for today. As a token of appreciation, we are pleased to offer all attendees today a souvenir bag of our own brand products across all of our four formats. In case you have not taken one already, please go ahead and take one with you. Thank you very much for your participation, and we look forward to seeing you again in the next analyst presentation.