Jollibee reports 5% earnings drop in Q1

Fast food leader Jollibee Foods Corp. reported a five percent drop in earnings during the first three months of the year due to higher employee expenses in line with a recent wage increase and the added costs of integrating and restructuring recently acquired Chowking.

JFC vice president for finance Miguel Navarette said that net income dropped to P212.427 million in the first quarter, from P223.613 million a year earlier due to the continued softness in the consumer market environment.

He said that while the company expects demand to eventually pick up in the second half, profit growth will likely be flat this year but this should rise again next year as Chowking's integration process becomes complete.

Company chairman and CEO Tony Tan Caktiong said while the past quarter has been a difficult one for the entire fastfood industry, their long-term business perspective is focused on making "prudent investments and implement sound business initiatives that poise our company to capitalize on the expected improvement in the economic situation."

"Initial indications are that our business has began to pick up in April. It is our expectation that the balance of the year will provide ample opportunity for the continued growth of our business in all areas," he added.

With the fold in of Chowking, JFC's systemwide sales improved seven percent to P4.1 billion in the first quarter, backed by the country's largest fast food network that accounts for over half of the market share in their respective sedments.

There are now 376 Jollibee outlets, 21 of which are overseas, Greenwhich Pizza stores number 193 while Chowking has 164, six of which are in the US and Dubai. Meanwhile, bakeshop and pastry chain Delifrance has six branches. Its chicken outlet, Mary's Foods Corp., on the other hand is being phased out with the last remaining store to close this month.

Navarette said on their expansion program this year is the construction of an additional 50 Jollibee stores and 35 Greenwhich outlets, on top of a P1.5-billion Jollibee commissary or super-kitchen, its third, to be put up in the Calabarzon area.

Funding for these projects will be sourced primarily from the company's sizable cash hoard. At end-March, JFC had P1.2 billion in appropriated retained earnings and P1.675 billion in unappropriated capital.