Jollibee H1 profit gets a boost from Burger King

Posted at 08/14/2012 3:56 PM | Updated as of 08/14/2012 11:04 PM

MANILA, Philippines - Jollibee Foods Corp.'s (JFC) acquisition of Burger King franchise in the Philippines and noodle fast food chain San Pin Wang in China has helped boost its net income in the first half of the year.

JFC told the stock exchange its net income rose 21% to P1.59 billion in the January to June period from P1.31 billion a year ago.

JFC's system-wide sales jumped 13.5% to P44.5 billion in the first six months of the year. Revenues, which were mainly from company-owned stores and commissaries and royalties from franchised stores, rose 15.6% to P34.1 billion.

In the second quarter alone, system-wide sales grew by 12.1% to P22.94 billion, on JFC's global store network expansion.

"The acquisition of San Pin Wang in Guangxi Province in March 2012 and the Burger King franchise in the Philippines in October 2011, added 2.1% to the growth rate," Jollibee said.

JFC chief financial officer Ysmael Baysa said the growth in net income is mainly due to higher volume of customers in its stores, cost improvements in the Philippines and China, lower financing costs and tax savings.

However, Baysa noted same store sales growth, rising cost of labor, rent and utilities are challenges to its businesses in China.

Jollibee is closely monitoring trends in world food commodity prices, which have recently spiked as a result of the severe drought in the US Midwest.  Baysa said due to a complex supply chain and its use of local agricultural produce, the impact of these commodity price increases on JFC would be much less and have a lag time of 6 to 8 months.

When world food commodity prices increased significantly in 2008, Jollibee had gradually increased the prices of its products to compensate for cost increase.

The recent flooding in Metro Manila and nearby provinces had affected some of its stores, but most of these had resumed operations. JFC said the stores damaged by the floods represent 1% of its national store network of 2,022.

"The impact of the combined disruptions in customer visits and store operations is estimated at about -2% on the normal national sales in the month of August, mostly coming from Metro Manila and North Luzon," the company said.

The Jollibee group opened 91 new stores in the first half of the year - 51 in the Philippines and 40 abroad.

The company currently operates 2,022 stores in the Philippines, including Jollibee (756), Chowking (385), Greenwich (201), Red Ribbon (207), Mang Inasal (448) and Burger King (25).

Overseas, JFC operates San Pin Wang, Yonghe King and Hong Zhuang Yuan in China, as well as Jollibee, Red Ribbon, Chowking in the Middle East and Southeast Asia.