Company executives, led by CEO Ernesto Tanmantiong and chief financial officer Richard Shin, also provided a detailed overview of the company’s financial results and its growth strategy moving forward, which we will break down here.
Headline financial numbers
JFC ended the first six months of the year with systemwide sales of P182.6 billion, an increase of 11.3 percent, and a net income growth spike of almost 29 percent to P5.66 billion.
In the second quarter, systemwide sales surged by 12.1 percent to P95.8 billion, driven by stronger-than-expected performance from key brands like Jollibee, Chowking, and Mang Inasal.
Second quarter net income soared 27.3 percent to a quarterly high of P3.2 billion.
Management’s view
Tanmantiong underscored the company’s “excellent” second-quarter performance and growing profit margins.
“Same-store sales grew ahead of the industry both in the Philippines and internationally,” he said.
The top markets were led by Europe, the Middle East, Africa, Asia, and North America, while Jollibee faces challenges in China due to the mainland’s slowing economy.
Record earnings
“Overall, our financial performance for the second quarter was even stronger than the first quarter across most metrics. Our top-line growth translated to an all-time high operating income of P5.1 billion and a Net Income After Tax (NIAT) of P3 billion,” said Shin.
“As we move into the second half of the year, we remain focused on capital allocation discipline and prioritizing opportunities with the greatest growth potential that will give the best value for JFC and our shareholders,” he added.
Better than KFC?
Aside from their finances, Tanmantiong was happy with an unexpected achievement.
“Alongside these ahead-of-industry results, I am particularly pleased to share that our Jollibee brand has been named Best Fast Food Fried Chicken (2024) by USA Today 10Best,” he said.
Digital shift
JFC said it was adapting to changing preferences.
Digital channel sales, including online orders and self-order kiosks, grew by 22.4 percent, driven by strong performances in EMEA (+195.4 percent), CBTL (+35.6 percent), and the Philippines (+29.6 percent).
Digital channels made up 21 percent of Jollibee Group’s sales for the quarter.
New acquisition
JFC also underscored the benefits of its latest deal to purchase 70 percent of South Korea’s Compose Coffee for about P14 billion.
Shin said the company has “superior cash returns and excellent profitability margins” thanks to its 100 percent franchised business model, which keeps costs in check.
“Further, it will strengthen the Jollibee Group’s balance sheet since it has no existing loans nor non-trade obligations,” Shin said.
Analyst view
Joey Cipres, AP Securities research analyst, said pullbacks are an opportunity to buy the stock.
“[W]e see a bright outlook for the company given its global diversification efforts through allocating capital to growing markets. We see the current decline in price as an even better opportunity to purchase shares,” he said in a recent research report.
AP Securities set a 12-month price target of P335.28 per share for JFC. Shares of the company rose nearly 3 percent to P241.60 per share on Wednesday.
JFC outlook
The fast food giant has revised some of its full-year targets due to the takeover of Compose Coffee.
For example, the store network was significantly upsized, and capital expenditure (capex) was reduced to P16-18 billion from its earlier estimate of P20-23 billion. Operating income is also expected to grow 18-20 percent from its previous projection of 10-15 percent growth.
JFC ended the first half of 2024 with 6,956 stores, an increase of 5.1 percent.
Scuttled P8-B preferred share sale
Shin said their reduced capex and strong earnings remove the need for an equity raise in the near term, and JFC may tap bank loans to capitalize on expected interest rate cuts later this year.
“We have decided to explore other capital-raising opportunities, focused on shareholder value and optimization of our capital structure,” Shin said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
