JOLLIBEE Foods Corp. (JFC), the listed operator of fast food chain Jollibee, raised its January to June net income by 13.4 percent on the strong performance of its domestic stores.
In a disclosure to the Philippine Stock Exchange, the company said its first half net income reached P3.06 billion, 13.4 percent higher than P2.7 billion recorded in the same period last year.
Revenues in the first six months increased 13.7 percent from a year ago to P54.42 billion while system-wide retail sales — the measure of all sales both from company-owned and franchised stores — rose 14.9 percent to P71.44 billion.
Net income in the second quarter improved 11.3 percent to P1.63 billion, while revenues in the quarter went up 14 percent to P28.32 billion and system-wide retail sales increased 15.1 percent to P37.1 billion.
Also in the second quarter, the company recorded 17.9 percent sales growth in its Philippine-based stores and 3.7 percent sales growth in its stores abroad.
“Our Philippine business, which accounts for at least 80 percent of our worldwide sales, has been experiencing its strongest organic growth in many years,” said Ernesto Tanmantiong, JFC chief executive officer (CEO).
“We attribute this to continued improvement in product quality and value offering supported by focused marketing campaigns, store expansion and renovation, low inflation rate, healthy growth of the country’s economy and election-related spending. All brands performed very well,” he added.
JFCs overseas stores registered a “mixed performance” with the fastest growth derived from the Southeast Asian region, he said.
Sales from stores in Southeast Asia grew 37 percent led by Singapore and Vietnam followed by the Middle East and the United States. But store sales in China declined by 5.7 percent “due to competitive pressure on Yonghe King, our largest brand there,” Tanmantiong said.
“Two other established brands in China, Hong Zhuang Yuan and San Ping Wang continued to perform strongly,” he said.
Gross profit margin improved to 19.2 percent in the second quarter from 16.9 percent in the same quarter last year on the back of stable raw material prices and low inflation rate, said JFC chief financial officer Ysmael V. Baysa
“Together with high same-store sales growth, all brands in the Philippines improved their operating income margins. Return on invested capital of new stores in the country remain healthy despite the high number of new stores opened in the past 15 months,” Baysa said.
“We look forward to continued strong profit growth while preparing for likely higher inflation rate in 2017 in the Philippines and other parts of the world and improving the profitability of our joint venture businesses,” he added.
Not included in its system-wide sales, JFC’s revenues from its joint ventures rose 38 percent year-on-year in the first six months. A total of 557 stores were from the joint ventures as of end-June, equivalent to 15 percent of JFC’s worldwide system-wide sales.
JFC has 50 percent interest in various joint ventures, namely: Highlands Coffee in Vietnam and Philippines with 131 existing stores; Pho 24 chain in Vietnam, Indonesia, Cambodia, Korea and Australia having 32 stores; and 12 Hotpot in China with 20 outlets and eight stores in other markets.
It also has a 40 percent equity share in its joint venture with Smashburger, which has 366 outlets at present, mostly in the United States.
To date, the company has 3,183 stores, of which 2,528 outlets are in the Philippines and 655 stores abroad.
Its brand network is composed of Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal, and Burger King in the Philippines and in other parts of the world; as well as Yonghe King, Hong Zhuang Yuan, San Ping Wan, and Dunkin Donuts in China; and Jinja Bar in the US.
JFC earlier announced it planned to spend P10.4 billion for capital expenditures (capex) this year to fund new stores and the renovation of existing stores.
Under a five-year plan up to 2020, JFC aims to grow its net income and revenues at double-digit rates yearly in a bid to land in the Top 5 quick service restaurants (QSR) in the world.
At present, JFC is the largest in Asia and 10th largest QSR in the world in terms of market capitalization, according to Bloomberg data cited by the company.