Jollibee profit rises 28% to P2.15B

Fastfood giant Jollibee Foods Corp. (JFC) reported a 28-percent growth in its net income last year to P2.15 billion, helped by higher sales and an improved margin expansion.

In a disclosure to the Philippine Stock Exchange, JFC said its system-wide sales — a measure of all sales to consumers both from company-owned and franchised stores — went up 13.5 percent while net income as a percent of revenues rose to 6.4 percent last year from 5.8 percent in 2005.

For the fourth quarter alone, JFC’s net profit grew 29 percent to P652 million while system-wide sales increased 11.6 percent to P12.43 billion.

JFC chairman and chief executive officer Tony Tan Caktiong said business across all brands and geographies performed strongly in the fourth quarter.

“We are pleased with the strong performance of all our brands in practically every market where we do business; in the Philippines and abroad. Our Philippine business grew at a high single digit rate of 9.5 percent while our foreign business rose 30.2 percent in the fourth quarter,” he said.

“Our people from all functions also did an outstanding job in expanding our profit margin through cost improvement in the stores in our commissaries and in our head offices, even as they improved products and introduced new products in order to delight our customers,” Tan Caktiong added.

He expressed optimism the company will perform better this year due to new products, intensified marketing campaigns and new store openings both locally and overseas.

“Sales has remained strong in the first one-and-half months of this year and we look forward to a continued momentum in the months ahead,” Tan Caktiong said.

JFC chief finance officer Ysmael Baysa said operating profit grew 34.8 percent last year while cost of sales improved from 46.4 percent to 45.3 percent.

General and administrative expenses likewise improved from 45.2 percent in 2005 to 42.8 percent.

“These improvements were achieved without any price increase last year except for the implementation of the two percent increase in the value-added tax in February 2006. We attribute the profit margin improvement to the strengthening of the peso which lowered our import costs and to the continuous cost improvement across all areas of our business such as logistics, store supplies, store utilities and head office support services,” Baysa said.

Return on equity rose to 20.5 percent from 18.1 percent. Cash generated from operations reached P4.7 billion, 73 percent higher than the P2.7 billion reported in 2005.

Last year, the Jollibee Group opened a total of 162 stores worldwide, 35 percent higher than the 120 stores opened in 2005.

As of end-December last year, the group had a total of 1,357 stores in the Philippines: Jollibee (566), Chowking (355), Greenwich (240), Red Ribbon (159) and Delifrance (37).

Overseas, the group had 170 stores: Yonghe King in China (105), Jollibee in the US (11), Red Ribbon in the US (19), Chowking in the US (11), Chowking in Dubai (6), Chowking in Indonesia (3) and Jollibee in other countries (15).

JFC earlier merged its three wholly-owned fastfood units Chowking Food Corp., Greenwich Pizza Corp. and Baker Fresh Foods Philippines as part of efforts to simplify its legal structure and improve its administrative efficiency.

Chowking, the surviving entity, will be renamed Fresh N’ Famous Foods Inc. and will be the second largest food service company in the country after Jollibee itself. It will be 52 percent the size of Jollibee in terms of system-wide sales.

The merged entity had annual system-wide sales of P12.8 billion in the first six months of last year broken down as follows: Chowking (P8.9 billion), Greenwich (P3.5 billion) and Delifrance (P400 million).