Korean coffee chain perks up JFC profit

INQUIRER FILES

Fresh contribution from its newest acquisition and strength in the domestic market fueled the 24.1-percent surge in the nine-month earnings of homegrown fast-food giant Jollibee Foods Corp. (JFC) to P8.47 billion, offsetting the continued weakness in the China market.

In a stock exchange filing on Tuesday, the company led by tycoon Tony Tan Caktiong said revenues had expanded by 10.6 percent to P196.25 billion in the January to September period.

System-wide sales likewise climbed by 12 percent to P281.11 billion.

READ: Jollibee Foods income reaches P8.47B

Growth in the Philippine market and Compose Coffee, the South Korea-based beverage brand that JFC had taken over in the third quarter, offset weak consumer spending in China, where sales declined by 12.1 percent.

According to JFC, Compose Coffee contributed 4.6 percent to global system-wide sales growth, and 1.4 percent to overall revenue growth.

“During the third quarter, we successfully completed the acquisition of Compose Coffee and the results that we are reporting include the impact of this value-accretive transaction,” JFC CEO Ernesto Tanmantiong said in a statement.

The maker of the popular Chickenjoy meals took over Compose Coffee in a $340-million deal with Elevation Equity Partners Korea Ltd. and Titan Dining II LP, further expanding its beverage portfolio despite it being a highly competitive segment.

JFC chief financial officer Richard Shin previously told reporters that they would focus on growing Compose Coffee in South Korea before eventually bringing it to other markets.

Domestic same store sales growth was at 6.4 percent on higher returns from the flagship Jollibee brand, roasted chicken maker Mang Inasal and Chinese restaurant chain Chowking.

International sales rose by 4.5 percent.

Broken down, the Europe, Middle East and Africa segment grew by 10.5 percent, driven mainly by Jollibee Vietnam. The United States and Canada, meanwhile, expanded by 19.5 percent and 19.7 percent, respectively.

Brand-wise, Jollibee grew by 12.6 percent; The Coffee Bean and Tea Leaf, up 10.6 percent; Milksha, up 4.2 percent; Highlands Coffee, down 2.5 percent, and Smashburger, down 4.5 percent.

As of end-September, total store network stood at 9,598, up by 42.8 percent versus a year ago.

In July, JFC canceled plans to raise P8 billion from the issuance of preferred shares due to “strong profit performance and cash flow generation.”

This also prompted the company to cut by at least 20 percent its P23-billion budget allocated for capital spending this year.