AEON Co. (M) Bhd executive director Poh Ying Loo said the company will be opening up only one new mall this year which is AEON Mall Nilai. (Pic by NSTP/OWEE AH CHUN)

KUALA LUMPUR: Japanese retailer AEON Co. (M) Bhd is allocating RM500 million capital expenditure (capex) this year, slightly lower allocation, as there be no new malls launch this year.

"We usually allocate between RM600 million to RM700 million in capex for new malls. But for this year, we are only opening one mall which is AEON Mall Nilai. We are currently refurbishing AEON Taman Maluri Shopping Centre and we expect to reopen it soon," executive director Poh Ying Loo said after the company's annual general meeting here earlier today.

"The rest of the capex will be for the refurbishment of our existing branches although we haven't finalized which yet."

AEON currently operates 28 AEON malls, 34 AEON outlets, one MaxValu and four MaxValu Prime Supermarkets across the country.

Managing director Shinobu Washizawa said the group has experience commendable growth in its e-commerce offerings since partnering with honestbee and HappyFresh.

"We have seen strong demand within this segment since this offering was rolled out in 2018. As of now, we have 15 outlets that are participating in the e-commerce segment and we are planning to roll out to more this year," he said.

When asked, Washizawa said the company has no plans to establish its own e-commerce cum logistics company, but prefers to collaborate with existing e-commerce platforms instead.

Going forward, AEON Co is optimistic that the government will introduce consumer-friendly initiatives that augur well for the industry despite the uncertainties in economic and business outlook.

"Disposable income has been a little bit decreasing. It means the price competition is tough in Malaysia. We are paying attention to competitors' as well as commodities prices," said Washizawa, adding that cost prices have increased by six per cent due to market environments.

"The government also requires us to control the prices, but after Sales and Service Tax is introduced, cost price is increasing. This is one of the issues."

For the financial year ended 31 December 2018, the group posted a net profit of RM105.1 million, on the back of RM4.4 billion revenue, due to new malls and stores opening.

Going forward, the firm expects a subdued 2019 because of ongoing challenges which include increasing cost of living, higher cost of doing business and rising global trade conflict that still pose challenges to the retail industry.