Red Ribbon, foreign branches boost Q3 earnings of Jollibee

Food giant Jollibee Foods Corp. said yesterday its net profit in the third quarter this year jumped 61.2 percent to P441 million, mainly driven by the strong performance of most brands across the country coupled with the acquisition of the Red Ribbon Bakeshop chain and substantial growth in its foreign operations.

In the nine months ending September this year, Jollibee’s net income grew 27.8 percent to P1.49 billion from P1.17 billion a year ago.

Systemwide retail sales, a measure of all sales to consumers from both company-owned and franchised stores against sales in the same months in 2005, increased 15.7 percent in the third quarter to P10.93 billion from P9.45 billion.

Year-to-date systemwide sales reached P32.78 billion or an increase of 14.2 percent from the previous level’s P28.69 billion.

Revenues amounted to P8.02 billion in the third quarter or 16.7 percent higher than the year ago’s P6.87 billion.

For the nine months ending September this year, revenues went up 15.4 percent to P24 billion compared with the previous level of P20.8 billion.

Domestic business sales grew 12 percent while foreign business sales, which now account for 13 percent of the Jollibee group’s business, improved by 50 percent. Excluding the effect of Red Ribbon, sales from operations grew 21 percent.

Commenting on the strong performance of the company, Jollibee chairman and chief executive officer Tony Tan Caktiong said:

"We are encouraged by our progress but we have to keep working hard to continue moving toward our long-term goals."

He, however, noted that while consumer spending has been improving in the past months, it has not yet fully recovered versus two years ago.

"We look forward to a continued improvement in consumer spending supported by an increase in disposable income in the months and years ahead," Tan Caktiong said.

Jollibee chief finance officer Ysmael Baysa said the company has essentially recovered its profitability from the adverse impact of high inflation and high utility cost which started in 2005, through a concerted effort by various business units, shared services, and corporate services.

Baysa said net income margin in the third quarter this year increased 5.5 percent while its return on equity reached 19.1 percent in the first nine months of 2006 compared with 17.1 percent in 2005.

He said Jollibee generated P2.8 billion of cash from operating activities, twice the 2005 level of P1.4 billion.

Of this amount, P1.6 billion went to new store construction.

Net cash generated for the period will allow the company to make another acquisition.

Baysa said the company is looking at acquiring an existing food brand, which can be local or foreign depending on how negotiations turn out with target companies. These, he said, include the bread business, and brands that cater to Filipino and Japanese foods.

Jollibee opened 115 new stores in the first nine months, bringing its total number of stores worldwide to 1,496, including 105 Yonghe King restaurants in China.

Baysa said the company is setting aside P2 billion this year for the continued expansion of existing businesses. This amount excludes planned acquisitions in which the company is ready to spend the same amount as the previous year.