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Thursday, May 15, 2014

Jollibee 1Q net income up a fifth as sales hit 5-year high

Jollibee Foods Corp (JFC) bucked cost pressures to push earnings by a fifth, as organic sales growth accelerated to a five-year high in the first three months of the year.

In a disclosure to the Philippine Stock Exchange, the homegrown fast food giant said its attributable profit rose 20.50 percent to P1.08 billion in the January to March period from P895 million in the same three months of last year.

System-wide retail sales, a measure of all sales to consumers from company-owned and franchised stores, jumped 14.6 percent, the highest quarterly organic sales growth in five years, to P27.31 billion from P23.84 billion in 2013.

The Philippine business posted a 12.3 percent expansion in system wide sales on the back of a double-digit growth of Greenwich, Red Ribbon and Mang Inasal, coupled with higher same-store sales due to increased volume and consumer visits. The Jollibee group also raised selling prices to cover the increase in cost of raw materials.

Compared to domestic operations, JFC’s international business expanded at a faster pace of 24.3 percent with Southeast Asia and the Middle East business growing by 39.1 percent, China by 22.3 percent, and the US by 19.5 percent.

Same-store sales of foreign businesses remained strong with Vietnam, Hong Kong and Saudi Arabia chalking up double-digit growth rates and China and the US improving by five percent and six percent, respectively.

Operating income climbed 17.7 percent despite cost pressures from higher commodity prices. As a result, JFC raised prices in the latter part of 2013 and the first quarter of 2014 but they were not sufficient to recover the increase in cost of raw materials.

"JFC will take the necessary steps to sustain healthy profit margins including implementing cost improvement and price adjustments in the balance of 2014 and in the quarters ahead," the listed company said.

The Jollibee group opened 55 new stores across its various brands in the first quarter, 42 in the Philippines and 13 overseas.

JFC operates the largest food service network in the Philippines with 2,217 stores at end-March, comprising the flagship Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger King. It was operating 588 stores abroad, including Yonghe King, Hong Zhuang Yuan and San Pin Wang, bringing its store network to 2,805 stores worldwide.

JFC has a 50 percent interest in joint ventures for Highlands Coffee (Vietnam, Philippines) at 77, Pho 24 (Vietnam, Indonesia, Philippines, Hong Kong, Macau and Japan) at 58 and 12 Sabu (China) at 12.

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