Higher prices, major spending tame Jollibee's profit growth 

Jollibee Foods Corp. earnings rose 9.5 percent in this year's first half, but costlier raw materials and higher investment spending held net income attributable to shareholders at 5.4 percent.

 

In a disclosure to the Philippine Stock Exchange on Friday, Jollibee's net income rose to P2.60 billion from P2.47 billion in the comparable 2014 period that saw a 17.2 percent growth in earnings.

 

Jollibee revenues increased to P47.86 billion from P43.70 billion. Network expansion reached 3,001 stores worldwide as of end-June.

 

"Raw material prices are declining; however, their benefits on profit margins have been offset by high level of inventories of materials with still high prices," Jollibee CFO Ysmael Baysa said.

 

The generally higher prices, along with the surge in general and administrative expenses arising from major investment spending on information technology, partially offset the increase in the company's revenues.

 

"We deliberately increased our inventories in the Philippines starting in 2014 as a safety measure during a major new system implementation and as a way of dealing with the logistics and delivery challenges in the country," he added.

 

In the second quarter, Jollibee grew its revenue by 9.1 percent to more than P24.85 billion from nearly P22.79 billion. But the company's attributable net income only increased by 3.3 percent to P1.47 billion from P1.42 billion. 

 

Return to double digits eyed in 2016

 

"We look forward to resurgence to double-digit sales and profit growth in 2016 and in the years ahead as we realize the benefits of improved profit margins, acceleration of store network expansion, stabilization of our information technology cost and higher profit contribution by our businesses abroad," Baysa said.

 

Jollibee opened 131 new stores including 102 in the Philippines from January to June, the company's fastest store network expansion. This compares with the 108 stores opened in the same period in 2014.

 

"We are on track to open at least 200 new stores in one year in the Philippines, the first time we will be able to do so. Historically, we were opening a hundred new stores per year," said Jollibee CEO Ernesto Tanmantiong.

 

The country's largest food service network includes the Jollibee, Chowking, Greenwhich, Red Riboon, Mang Inasal and Burger King brands.  The company also operates Yonghe King, Hong Zhuang Yuan and San Pin Wang outlets abroad.  

 

"The key drivers of our store network growth are strong same-store sales growth and improved profitability and financial returns of our stores and increased capability of our organization," Tanmantiong said.  — Keith Richard Mariano/ELR, GMA News