New stores, better margins drive 7-Eleven Philippines net income up 27.9%

Despite a business environment marked by tight competition, Philippine Seven Corp. (PSC) grew its net earnings by over a fourth in 2014 as more stores were opened and better margins were registered, the , the local franchise holder of 7-Eleven convenience stores told the Philippine Stock Exchange on Thursday.

 

Net income rose 27.9 percent to P873.3 billion from P682.6 billion in 2013.

 

This translated into P1.91 earnings per share, up 27.9 percent from P1.49 in the same comparable period.

 

The company noted an improvement in operating margins and continued expansion all over the Philippines which brought year-end number of total stores to 1,282.

 

Sales from corporate and franchise stores rose 19.3 percent to P20.6 billion from P17.2 billion.

 

Philippine Seven president and CEO Jose Victor Paterno said the long-term growth prospects are favorable, noting the company is capable of sustaining the momentum toward the goals in earnings and expansion.

 

“PSC has taken steps to protect and expand its leadership in light of increased competition, recognizing that rewards for market share are especially strong in the convenience store sector," he said. 

 

Paterno said the measures include faster pace of expansion in areas contested by the competition, coupled with strategic entry into new territories.

 

"The latter may be unprofitable for the first few years due to the high fixed costs of logistics, but we believe we will later be rewarded with strong first-mover advantages," he said.

 

"Last year we entered Panay and built on our entry into Negros and Cebu the years prior. This year we will be entering Mindanao via Davao and Cagayan de Oro,” Paterno noted.

 

In January, the company said it is increasing its capital expenditures by more than 50 percent to P3 billion to boost an accelerated store expansion strategy.

 

In November 2012, Ayala Land Inc. brought Japanese convenience store FamilyMart into the Philippines after the joint venture with Tantoco-led Rustan's group signed a shareholders' agreement with FamilyMart Co. Ltd. and Itochu Corp.

 

The Villar group of former Senator Manuel B. Villar is also joining the fray via the homegrown brand All Day which was originally called Finds Store.

 

The Gokongwei group, under Robinsons Convenience Stores Inc., has been operating MiniStop since 2001. Owned by the Mitsubishi Group, MiniStop is also a Japanese convenience store chain. – Danessa O. Rivera/VS, GMA News