Fastfood chain Jollibee Foods Corp. (JFC) reported an increase of 7.4 percent in net income for the first half of 2015 to P2.7 billion from P2.5 billion a year earlier.
The listed fastfood chain operator said despite good sales, its first-half growth was modest due to the higher prices of raw materials used in production.
Revenues grew 9.5 percent year-on-year to P47.85 billion from P43.7 billion, while systemwide retail sales rose 8.9 percent to P62.15 billion from P57.05 billion.
For the second quarter alone, the company’s net income increased 3.3 percent to P1.46 billion from P1.41 billion, while revenues climbed 9.1 percent to P24.85 billion from P22.78 billion.
System wide retail sales improved 8.4 percent to P32.24 billion from P29.74 billion.
The 3,000th store milestone
“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 able to do so,” JFC Chief Executive Officer Ernesto Tanmantiong said in a statement.
“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,” he added.
“We look forward to JFC’s resurgence to double-digit sales growth in the quarters and years ahead,” Tanmantiong said.
Double-digit growth seen in 2016
Chief Financial Officer Ysmael V. Baysa said the group is hopeful for double-digit growth in 2016 due to the realization of benefits from improved margins, acceleration of store network expansion, stabilization of IT costs and higher profit share from abroad.
“Raw materials prices are [now]declining; however, their benefits on profit margins have been offset by high levels 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.
As of end-June, the company was operating a total of 3,001 outlets – 2,374 in the Philippines and 627 abroad.
JFC is also looking at growing its sales and net income at double-digit rates yearly in a bid to make the company one of the Top 5 quick-service restaurants in the world. Growth areas are seen mainly in the Philippines, China and the United States.
A 68.5% boost to 2015 capex
The company’s capital expenditure (capex) this year stands at P9.1 billion, which is 68.5 percent higher than the P5.4 billion actually spent in 2014. Of the P9.1 billion, P6.7 billion will go to expansion and operations expenses in the Philippines, P1.7 billion for China, and the rest – P700 million – will go to its US, Southeast Asia and Middle East stores.
Earlier, the fastfood operator said it was also looking at establishing and opening five initial Dunkin Donuts stores in China, pegged to cost a total of P75 million.
At the start of the year, JFC via its international unit Jollibee Worldwide Pte. Ltd., and its partner Jasmine Asset Holding Ltd., formed Golden Cup Pte. Ltd. to be the main franchisee of the Dunkin’ Donuts brand in China. The joint venture company is aiming to establish 1,459 Dunkin’ Donuts stores in China over the next 20 years.
Some of the company’s well-known brands besides Jollibee are Chowking, Greenwich, Red Ribbon, Mang Inasal, and Burger King.
JFC also has other joint ventures in China, including a commissary in Anhui province and the operations of San Pin Wang and 12 Sabu.