Jollibee's net income drops 10.4% in 2015
MANILA, Philippines – Jollibee Foods Corporation (JFC) saw its income drop by 10.4% in 2015 due to a sharp increase in costs in the fourth quarter of last year.
JFC, the country’s largest food service company, announced on Tuesday, February 9, that its net income for 2015 fell to P4.8 billion ($110.6 million) from P5.3 billion ($113.2 million) in 2014.
For the fourth quarter alone, net income dropped 45% to P948 million ($19.87 million) versus P1.72 billion ($36.06 million) posted in the same quarter in 2014.
Significant short-term costs amounting to almost P1 billion ($20.96 million) hurt the company's 2015 profits, said JFC chief finance officer Ysmael Baysa.
These costs covered information technology upgrades, an increase in network development organization, the acquisition of a 40% stake in US-based hamburger chain Smashburger, and extra supply chain and logistics expenses.
"These are necessary investments that are helping to make growing faster than we anticipated possible," Baysa said.
"[JFC] does not expect the same rate of expense increases in 2016. We look forward to a strong profit recovery in 2016 and in the years ahead," he added.
Without the additional costs, net income for the fourth quarter would have grown by 8.2%, and for the entire 2015, by 7.8%.
Despite the lower net income, JFC's systemwide sales for 2015 increased by 10.9% to P130.7 billion ($2.741 billion) from P117 billion ($2.453 billion) in 2014, as the company opened a record 303 stores last year.
Of those newly opened stores, 246 are in the Philippines, 39 in China, 17 in Southeast Asia and the Middle East, and one in the US.
"The new stores are performing well, particularly those in the Philippines, exceeding their sales target and return on investments," said JFC CEO Ernesto Tanmantiong.
As of end-2015, JFC operates a total of 2,475 Jollibee restaurants. That number rises to 3,635 if affiliates and joint venture partnerships, namely Highlands Coffee, Pho 24, 12 Hotpot, and the recently acquired Smashburger, are included.
Last November, JFC said that it will spend P10.4 billion ($218 million) in capital expenditure for 2016, of which P7.5 billion ($157.2 million) is earmarked for new stores and renovations of existing stores.
The firm also disclosed that it is eyeing additional acquisitions similar to the Smashburger deal.
The share price of JFC on Tuesday declined by 1.12% to P212.20 per share. – Rappler.com
$1 = P47.69