Jollibee reports 3.7% drop in net profit to P2.3 billion last year

MANILA, Philippines - Jollibee Foods Corp., the country’s largest fast-food chain operator, reported a 3.7 percent drop in net profit last year due to increased raw material costs and interest expenses.

In a financial report filed with the Philippine Stock Exchange (PSE), Jollibee, which serves rice meals, hamburgers and friedchicken and outsells global fastfood giant McDonalds’ said net income fell to P2.3 billion from P2.39 billion in 2007.

Cost of sales grew faster than revenue, by 18.3 percent to P21.15 billion from only P17.89 billion. General and administrative likewise went up 12 percent to P18.79 billion. 

Interest expenses jumped 60 percent to P88.76 million from only P55.47 million.

Total revenues rose 13.9 percent to P44.19 billion with with total system-wide sales – a measure of sales at both company-owned and franchised stores – rising 12.8 percent to P58.16 billion. Net operating income improved by 3.6 percent to P3.16 billion.

In the fourth quarter of 2008 alone, however, Jollibee posted net earnings of P661 million or 20.2 percent higher than the previous level of P550 million. Systemwide sales grew 18.1 percent to P16.55 billion while total revenues amounted to P12.54 billion, up 17.4 percent from P10.68 billion.

JFC chairman and chief executive officer Tony Tan Caktiong said fourth quarter sales growth in both the Philippine and foreign markets were strong driven by healthy same store sales growth, new store openings and acquisition of the Hongzhuangyuan restaurant chain in Beijing in October 2008. 

Excluding this acquisition, sales from foreign operations grew 53.6 percent driven mainly by Yonghe King in the People’s Republic of China and Jollibee in the United States. 

“Our aim is to derive at least half of our revenues from outside of the Philippines at some point in the future, both from organic growth and acquisitions even as we expect our Philippine business to sustain a healthy growth rate in the years to come, “Tancaktiong said.

Inspite of higher commodity prices, tightening of credit and the global financial turmoil, Jollibee pursued major long-term investments last year, opening a total of 186 new stores – 10 locally and 76 overseas – compared with only 174 in 2007, Tancaktiong pointed out.

Tancaktiong said the Jollibee Group shelled out a total of P5.3 billion last year, P2.8 billion of which were used for capital expenditures while the remaining P2.5 billion for acquisitions. “These levels are so far the highest in our company’s history. These reflect our confidence in our long-term growth strategy even as we tackle the serious challenges of the moment and in the months ahead,” he said.

As of Dec. 31, 2008, the Jollibee Group had a total of 1,804 stores worldwide, of which 1,515 are located here comprising flagship brand Jollibee, 651; Chowking, 387; Greenwich, 231; Red Ribbon, 211; Delifrance, 26; and Manong Pepe’s 9. It had a total of 289 stores operating abroad: Yonghe King in the People’s Republic of China with 141 stores, Jollibee with 49 mostly in the United States, Chowking with 31 mostly in the United States and the United Arab Emirates, Chu Shui Tang Tea House and Hongzhuangyuan which has 38 stores in China.