Jollibee profit down 14.4% in 2019

The one-time gain from the asset revaluation of newly acquired gourmet beverage retailer Coffee Bean & Tea Leaf shored up the profitability of homegrown fast-food giant Jollibee Foods Corp. (JFC) in the fourth quarter of 2019.

For the full year 2019, however, JFC saw a 14.4-percent drop in 2019 attributable net profit to P6.33 billion, the company disclosed to the Philippine Stock Exchange on Tuesday.

Fourth quarter net profit surged by 37.1 percent year-on-year to P1.8 billion, primarily due to the P1.8-billion gain from the acquisition of CBTL, as the value of net assets acquired stood higher than the purchase price based on latest valuation by independent appraisers.

JFC’s full-year earnings also reflected new accounting standards under Philippine Financial Reporting Standards (PFRS) 16, under which any right-of-use asset is recognized and amortized over the lease term while interest expense is incurred on the lease liability.

Company chief executive officer Ernesto Tanmantiong said: “2019 was a very tough year for JFC, but the resilience and determination of our people have kept driving the business forward.”

“We are very encouraged by the continued rise in customer visits to our stores, the strong growth in our store network with sustained healthy return on invested capital, the strong momentum in the delivery business, the recovery of the Red Ribbon product supply in the Philippines and the very good indicators of recovery of the Smashburger business in the United States,” he added.

In the first half of 2019, losses from American hamburger chain Smashburger and one-off expenses related to Red Ribbon’s transition to a new factory gnawed on the group’s earnings.

“We look forward to a much stronger sales and profit performance in 2020 and the years ahead even as we consolidate the financial performance of CBTL into our financial results,” Tanmantiong said.

For the full year 2019, JFC’s system-wide sales grew by 14.9 percent to P243.79 billion. Revenues for the year rose by 11.4 percent to P179.64 billion.

CBTL, which was acquired in September 2019, contributed 9.4 percent to the revenue growth and added 1,173 stores to JFC’s global network. The group ended the year with 5,971 stores globally, up by 32.1 percent from the previous year. Of these 3,316 stores were in the Philippines.

Full-year operating income, taking into account PFRS 16, declined by 25.1 percent to P5.87 billion.

For the fourth quarter alone, system-wide sales rose by 23.2 percent to P72.72 billion, supporting a 17.7-percent growth in revenues to P52.43 billion. Operating income for the quarter rose by 11.6 percent year-on-year to P1.81 billion.

This 2020, JFC plans to open 600 stores, about 250 to 300 of which will be in the Philippines while 300 to 350 will be overseas.

This year may also “mark the first time in JFC’s history when the international business generates greater organic store expansion than the Philippine business,” the company said. —Doris Dumlao-Abadilla INQ