Jollibee’s 2nd quarter profit surges 26.8% to P536.2M

Fastfood giant Jollibee Foods Corp. (JFC) posted a 26.8-percent growth in its second quarter net profit this year to P536.2 million, propelled by price adjustments and cost improvement that improved sales margins.

For the first six months of the year, JFC said its net profit rose by 11.1 percent to P894.6 million from P805.12 million in the same period last year.

JFC chief executive officer Tony Tan Caktiong said net income as a percent of revenues improved to 7.3 percent in the second quarter of 2005 from the 2004 level of 6.1 percent. "Recovering profit margin from rising inflation will help fuel our long-term growth. Margin recovery during the quarter was achieved by a combination of cost improvement and gradual price adjustments on our products," Tan said.

The group said it managed to report double-digitgrowth in system-wide sales for the second quarter and the first half even if it expected a slower growth in sales due to inflation pressures on consumer spending and the high sales base in 2004 when sales to consumers benefited from election-related spending.

Consolidated total revenues went up 6.9 percent to P7.39 billion in the April to June period this year from P6.91 billion, bringing year-to-date revenues to P13.93 billion compared with P12.7 billion a year earlier.

JFC’s system-wide sales, a measure of all sales to consumers both from company-owned and franchised stores, grew 11.8 percent to P10.2 billion in the second quarter and by 13.1 percent to P19.2 billion in the first half.

In the Philippine market, JOllibee brand’s system-wide sales went up 8.3 percent; Chowking, 14.6 percent; Greenwich, 9.7 percent; and Delifrance, 30.6 percent. In the foreign market, sales of Yonghe King in China grew by 18.6 percent.

Gross margin improved from 49.3 percent in the second quarter of 2004 to 51 percent this year.

Consolidated operating expenses, meanwhile, rose 8.9 percent to P3.1 billion and by 15.9 percent to P5.9 billion in the first six months of the year. The increases in cost of power, fuel and transport had not been recovered during the first half of the year.

JFC chief finance officer Ysmael Baysa cautioned that the increases in costs continue to exert pressure on sales and profit margin. "We are encouraged by our financial performance in the second quarter when our return on equity reache 24.1 percent but are concerned with the continuing increase in the price of crude oil in the world market and other commodities," Baysa said.

He said the company plans to continue investing for its long-term growth with P1.5 billion in capital already budgeted for the opening of 80 to 100 new stores and for the refurbishment of existing stores.

The JFC group had opened a total of 37 stores as of end-June 2005: 15 Jollibee, 10 Chowking, three Greenwhich and three Delifrance, and six in foreign operations, mainly four Yonghe King in China.

As of end-June this year, JFC had a total of 1,079 stores: 508 Jollibee, 310 Chowking, 228 Greenwhich and 33 Delifrance. It also operates 121 stores abroad mostly Yonghe King in China with 88 stores for a total of 1,200 stores in nine countires worldwide.