Jollibee profit drops 6.2% to P358.3M in 1st quarter

Fastfood giant Jollibee Foods Corp. reported a 6.2 -percent drop in its first quarter profit this year to P358.3 million from P382.1 million the previous year as the rapid increase in the cost of utilities reduced its operating margins.

However, system-wide sales, a measure of all sales to consumers from both company-owned and franchised stores, rose 14.6 percent in the period January to March this year compared with the same period a year earlier.

Jollibee chairman and chief executive officer Tony Tan Caktiong said he is concerned about the short-term effect of high inflation rate on the company’s sales volume and profit but sees stronger business performance in the long-term.

"We continue to be encouraged by the performance of our Yonghe King business in China. We’re also pleased with the strong start of our new Chowking store in Indonesia and the recovery of Jollibee business in Vietnam where sales grew by 46.1 percent in the first quarter. These developments continue to give us indications that we will be able to build a meaningful business abroad over the next years. In the Philippines, we still see many opportunties for geographical and food segment penetration in the years ahead," Tan Caktiong said.

System-wide sales of Yonghe King grew 27.2 percent in the first quarter.

On the homefront, the Jollibee brand’s system-wide sales went up 6.2 percent, Chowking 15.9 percent, Greenwich 4.5 percent and Delifrance 31.5 percent.

The Jollibee Group opened a total of 23 stores in the first quarter this year.

"We attribute the lower sales growth rate to inflation pressures on consumer spending and on likely lower growth rates in agricultural output and in the gross domestic product. The lower sales growth rate was consistent across regions," Tan Caktiong added.

Jollibee chief finance officer Ysmael Baysa said the increases in the cost of raw materials had been recovered, resulting in the improvement in gross margin from 48 precent to 50.8 percent. However, the increases in cost of power, fuel and transport had not yet been recovered, resulting in the contraction in operating income margin from 8.6 percent to 7.4 percent.