JFC’s net income soars 17.7% to 11.4B

Jollibee Foods Corporation (JFC), the largest Asian food service company, reported a 17.7 percent rise in attributable net income in the first quarter of 2016 to 11.4 billion on stronger sales and better margins.

In a disclosure to the Philippine Stock Exchange, Jollibee said its system wide sales, a measure of all sales to consumers both from company-owned and franchised stores, grew by 14.8 percent to 134.3 billion in the first quarter of 2016 partly due to election spending.

The sales increase was driven by an 8.0 percent same store sales growth on a worldwide basis and store network growth of 6.8 percent. Same store sales growth pertains to restaurants that were already open for at least 15 months. It excludes sales growth from new store opening.

Philippine brands reported strong sales in the first quarter of 2016, growing by 16.0 percent compared to the first quarter of 2015 from continued strong same store sales growth - mostly from higher volume of customer traffic per store and partly from higher amount of purchase per customer; and from store network expansion.

Aside from its continuous product improvement, new product introductions, marketing campaigns and restaurant design improvement, JFC attributes the strong same store sales growth to low inflation rate in the country that averaged 1.1 percent in the first quarter which made consumer products more affordable with rising household income.

Election-related spending which boosted consumer spending also helped drive JFC's same store sales growth in the first quarter.

The foreign business reported a 10.5 percent growth in system wide sales for the quarter versus the same period a year ago.

The US business grew by 17.4 percent while Southeast Asia and the Middle East business expanded by 32.2 percent led by Jollibee Vietnam that grew by 48.2 percent (in Vietnamese currency).

The China business however, grew at a slower rate of 1.9 percent as Yonghe King, JFC's biggest brand in China experienced sales pressure from recovering competing brands.

For 2016, JFC plans to invest 110.4 billion in capital expenditures, more than double the 14.7 billion spending in 2015.

Of this, 17.5 billion will be used for new stores and renovations of existing stores. JFC plans to build at least 200 new stores in the Philippines in 2016, after opening 249 in 2015.

The balance 12.9 billion capital expenditures will be mostly for supply chain investments. JFC plans to build three new commissary facilities in Luzon, expand the capacity of its biggest commissary in Canlubang, Laguna and set up two new distribution warehouses in North Luzon in 2016 in order to support its fast growing business in the Philippines.

These capital expenditures will be funded by cash generated from operations.