Max’s seen entering 2015 with clean balance sheet after P9-M loss

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MANILA. Philippines—Restaurant chain operator Max’s Group Inc., formerly Pancake House Inc., expects to enter 2015 with a clean balance sheet as it seeks to complete within this year a restructuring program and debt refinancing after the consolidation of the country’s two leading casual dining chains.

In the first nine months of this year, Max’s group incurred a net loss attributable to equity holders of parent of P9.1 million, a turnaround from the P120 million net profit in the same period last year, according to a regulatory filing on Monday.

“The results are in line with management’s deliberate thrust to first improve the brand service platform, uplift quality of product offering and store appearance, control costs and rationalize store network, in terms of location, size and positioning for the brand,” Max’s Group president Robert Trota said in a press statement.

Nine-month revenues went up slightly to P2.7 billion from P2.69 billion year-on-year while expenses increased to P2.8 billion from P2.57 billion.

For the third quarter alone, the company said, net income amounted to P5.29 million but excluding non-recurring items, core net income for the three-month period amounted to P23.07 million. Core profit for the nine-month period was reported at P70 million compared to P116 million in the same period last year.

The acquisition of Pancake House by the Max’s group has resulted in the latter’s back-door listing on the local stock exchange.

The group said the consolidated company was now undergoing a comprehensive restructuring program to rationalize its portfolio of brands and streamline operations. This exercise involves strengthening brands, revitalizing, selling or winding down underperformers and retraining staff to improve service levels. A blueprint for extracting synergies with the Max’s Group stable of businesses is also being finalized.

As of today, 15 to 20 of the Pancake House Group’s 301 stores are “underperforming and are being evaluated for either right-sizing, conversion to franchise or closure,” the company said.

It is estimated that this exercise alone will save the company about P35 million, allowing the company to redeploy capital and other resources to businesses where returns are maximized. It is envisioned that the pivotal elements of the restructuring program, including the refinancing of debt, would be completed by the end of this year.