Jollibee's profit sustains recovery but not yet back to pre-crisis level

MANILA, Philippines (Update 1, 3:28 p.m.) — Homegrown fast food giant Jollibee Foods Corp. said on Wednesday its profits continued to recover from a pandemic-induced slump as its “business transformation” pays off, but the company is yet to return to its pre-crisis financial shape.

Jollibee reported a net income of P1.1 billion in the first half, reversing losses amounting to P12 billion recorded in the same period last year. In the April-June period, net income reached P1 billion, a turnaround from P10.3 billion net loss a year ago and marking the second straight quarter of net profits after returning to the black to start the year.

Financial results showed system wide sales grew 64.7% year-on-year to P50.5 billion in the second quarter, pushing up the six-month figure by 14.5% on-year to P98.3 billion. Sales from delivery, take-out and drive-through channels continued to drive growth both at home and abroad, Jollibee said.

It was all thanks to the company’s P6.2-billion “business transformation” plan meant to keep the company afloat amid the pandemic. The multibillion peso strategy saw Jollibee beefing up its delivery services to offset a slump in dine-in sales, while shutting down underperforming stores to reduce expenses. At the same time, Jollibee said some of its loss-making acquisitions like US-based Smashburger have narrowed their losses.

But Jollibee is not yet back to its pre-pandemic form. Compared to the same period in 2019, figures showed net income in the first half was 54.9% lower while system wide sales were down 13.5%.

Explaining its financial performance, Jollibee — which operates 17 brands in 33 countries — said the lingering pandemic’s impact on its businesses around the world was “mixed” last quarter. Sales in the US sustained their recovery but it was the opposite in southern China, where sales growth slowed due to renewed lockdowns. Elsewhere in China, Jollibee said sales continued to “grow above pre-pandemic levels”.

Meanwhile, sales growth “reversed” in Southeast Asia particularly those in Vietnam, Philippines, Singapore and Malaysia while those in the Middle East and Europe “continued to improve.”

Despite pandemic uncertainties, Jollibee said it is buying out the rest of investors in Titan Dining LP, the private equity fund which ultimately owns the Tim Ho Wan brand, a Michelin star-awarded dim sum restaurant chain. The transaction, valued at SGD71.56 million, will effectively give Jollibee full ownership of Titan.

"We think that the full acquisition of Titan Dining LP is aligned towards JFC's goal of expanding its international business as it capitalizes on the faster recovery in foreign markets such as the U.S. and China," Rastine Mercado, research director at China Bank Securities, said. "Overall, this transaction should be value-accretive over time, as it expands its store footprint for Tim Ho Wan."

Shares in Jollibee were trading above 1% following the announcement before erasing those gains, closing 0.47% lower to P191.60 each on Wednesday.

Editor's note: Added analyst's comment