Jollibee Foods swings to profitability in Q1

Home-grown global fast food chain Jollibee Foods Corp. (JFC) reverted to profitability in the first quarter of 2021 after suffering financial losses in the same period last year.

In a disclosure to the Philippine Stock Exchange on Tuesday, JFC reported a net income of P49 million, a turnaround from a net loss of P1.952 billion in the first quarter of 2020.

“Most of our businesses abroad are reaching sales at pre-pandemic level. In the month of March 2021, our sales in China, North America (Philippine brands), EMEAA (Europe, Middle East and Asia) and SuperFoods mainly in Vietnam were already equal to or slightly higher than those in March 2019. Same store sales growth was offsetting the effect of stores closed permanently due to the pandemic,” said JFC chief executive officer Ernesto Tanmantiong.

“Our profit and cash flows recovered strongly versus a year ago reflecting the successful execution of our Business Transformation program. Practically every cost item in our company, from stores to commissaries to support group offices decreased far more than our sales decline. While we still face significant challenges in the Philippines due to continued restrictions related to the pandemic, our Philippine business provided the most profit contribution among all our regions in the world,” he added.

The improved bottom line figures came despite a 13.4% decline in consolidated System wide sales—a measure of all sales to consumers from both company-owned and franchised stores—to P47.8 billion and a 12% slide in revenues to P34.681 billion.

This is due to cost improvements from the company’s Business Transformation program in its stores, commissaries and support groups.

JFC’s Business Transformation program, include the permanent closure of 486 non-profitable stores worldwide and four commissaries in the Philippines, improvement in operating expenses in the remaining stores and supply chain facilities, and various other cost-saving initiatives.

“Selling price adjustments were also implemented in the fourth quarter of 2020 and the first quarter of 2021 to offset partly the impact of rising inflation rate,” the company said.

General and administrative expenses declined by 16.7% compared to last year due to cost savings generated from the Business Transformation program.

Office expenses from support groups declined further as office-based employees in the Philippines continued to work from home.

In addition, JFC said deferred tax assets were reduced by P629.4 million, resulting from the reduction in income tax rates, brought about by the Corporate Recovery and Tax Incentives for Enterprises Act  (CREATE) Act - which reduced income tax rates from 30% to 25%.

“The reduction in income tax rates decreased the value of existing deferred tax assets and increased the total provision for income tax as of March 31, 2021 but will reduce income taxes on future profits,” JFC said.

JFC said it opened 79 new stores in the first quarter: 19 in the Philippines, 12 in China, 8 in North America, and 1 in EMEAA. SuperFoods and CBTL opened 24 and 15 stores, respectively.

A total of 76 stores were permanently closed during the quarter, comprised of 18 in the Philippines and 58 abroad.

JFC is one of Asia’s largest food service companies with 17 brands in 33 countries.

As of end of March 31, 2021, JFC was operating 5,827 stores worldwide, 3,218 of which are in the Philippines and 2,609 in international.

Of its international stores, 386 are in China, 347 in North America, 268 in EMEAA, 542 with SuperFoods mainly in Vietnam, and 1,066 with Coffee Bean & Tea Leaf.

Its largest brands by store outlets worldwide are Jollibee with 1,487; Coffee Bean & Tea Leaf, 1,066; Chowking, 618; Mang Inasal, 588; and Highlands Coffee, 482.—AOL, GMA News