Jollibee nets P2.6B in H1, up 5.4%

HOMEGROWN fastfood giant Jollibee Foods Corp. grew its first semester net profit by 5.4 percent year-on-year to P2.6 billion amid an unprecedented store expansion program that breached the 3,000-branch network globally.

For the second quarter alone, net profit rose by 1.6 percent year-on-year to P1.41 billion, JFC disclosed to the Philippine Stock Exchange on Friday. These profits represent those attributable to equity holders of parent company.

The flat growth in the second quarter was attributed by the company to higher raw material prices that gnawed on profit margins while major investment spending on information technology, particularly on SAP implementation significantly increased general and administrative expenses.

Six-month revenues went up by 9.5 percent as the group accelerated its store network expansion to 3,000 worldwide by opening 131 new stores, of which 102 were in the Philippines. This was the highest store opening done by Jollibee in the first six semester of a year.

“We are excited about our recent rate of store network expansion. We just achieved the 3,000th store milestone. We are on track to open at least 200 new stores in one year in the Philippines, the first time we will be able to do so. Historically, we were opening a hundred new stores per year in the country. We look forward to opening 300 new stores worldwide this year, also a first in our history with 100 abroad, the bulk of which will be in the People’s Republic of China,” JFC’s chief executive officer Ernesto Tanmantiong said in a press statement.

“The key drivers of our store network growth are strong same store sales growth and improved profitability and financial returns of our stores, built over the past two years across the brands and across different regions in the world, and increased capability of our organization particularly our network development group in the Philippines. We look forward to JFC’s resurgence to double digit sales growth in the quarters and years ahead,” he added.

System-wide sales rose by 8.9 percent year-on-year to P62.15 billion in the first semester. For the second quarter alone, sales grew by 8.4 percent to P32.25 billion.

JFC chief financial officer Ysmael Baysa said while raw material prices were declining, their benefits on profit margins had been offset by high level of inventories of materials with still high prices.

“We deliberately increased our inventories in the Philippines starting in 2014 as a safety measure during a major new system implementation, and as a way of dealing with the logistics and delivery challenges in the country,” Baysa said.

“We look forward to resurgence to double digit sales and profit growth in 2016 and in the years ahead as we realize the benefits of improved profit margins, acceleration of store network expansion, stabilization of our information technology cost and higher profit contribution by our businesses abroad, even as all regions worldwide have grown their profit in the first half of 2015 versus a year ago. Meanwhile, our working capital improved significantly in the second quarter of 2015, bringing the Company back to a strong net cash level and in a position to fund major investments for long term growth,” Baysa explained.

As of end-June, JFC operated 2,374 restaurant outlets in the Philippines under various brands: Jollibee (880), Chowking (422), Greenwich (219), Red Ribbon (349), Mang Inasal (459) and Burger King (45). It had 627 stores overseas including the brands acquired in China: Yonghe King -(314), Hong Zhuang Yuan (44) and San Pin Wang (56). JFC also has a 50 percent interest in joint ventures for the following stores: Highlands Coffee (Vietnam, Philippines) with 81 stores, Pho 24 (with 38 stores in Vietnam, Indonesia, Cambodia, and Korea) and 12 Sabu (with 20 stores in China).