By Denise A. Valdez, Senior Reporter

JOLLIBEE FOODS CORP. (JFC) swung to a P10.17-billion attributable net loss in the second quarter of 2020 as the coronavirus-related lockdown took a toll on the company’s global operations.

The fast food chain operator said in a Wednesday filing that the ongoing health crisis reversed its P1.04-billion profits recorded last year.

Aside from a 47% drop in revenues to P23.33 billion, JFC’s bottom line reflected the company’s P7-billion investment for business transformation — its strategy to cope with the eroding top line.

Sales from all company-owned and franchised stores fell 48% to P30.68 billion. While 88% of its stores were already open at the end of June, dine-in operations remained limited, thus pushing sales to rely on delivery and take-out services.

Year to date, JFC recorded an attributable net loss of P12.99 billion, a turnaround from the P2.18-billion attributable profit it posted a year ago. Revenues declined 25% to P62.76 billion, and system-wide sales dropped 25% to P86.83 billion.

“The business results were very bad but in line with our forecasts. We are now focusing on rebuilding our business moving forward along with implementing major cost improvement,” JFC President and CEO Ernesto Tanmantiong said in a statement.

Part of the company’s strategy is introducing new products, launching cloud kitchens, improving delivery systems and opening new stores in North America, Vietnam, Malaysia and China. Its target is to open a total of 338 stores within the year.

JFC will also be closing 255 company-owned stores as part of its transformation, and franchising 95 stores that are originally company-owned. It is paying pre-termination penalties for stores in the US and China, closing supply chain facilities and reducing organization size in other countries.

By the end of 2020, JFC would have reduced its 2019 store count of 5,945 by 416 stores or 7%.

“The cost improvement resulting from the business transformation will be recurring annually with a cash payback of about two years, with full annual impact starting to take effect in 2021,” JFC Chief Financial Officer Ysmael B. Baysa said.

The program is also seen to help Smashburger and The Coffee Bean and Tea Leaf to post profits starting 2021.

“We expect sales and profit to increase significantly in 2021 to a point closer to the levels of 2019 and to grow at least at historical growth rate of 15% annually by 2022,” Mr. Tanmantiong said.

Despite reporting losses in the first half, JFC shares at the exchange managed to grow P4.80 or 3.80% to close at P131 each on Wednesday.

“Although JFC’s financial results came poor, it was still in line with the company’s forecasts, and recovery hopes are on the table, which the investors are banking into,” Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a text message.

“JFC’s financial performance is expected to be bad and could possibly record a net loss for the full year of 2020, but recovery outlook for next year, starting this third quarter, makes this stock still attractive to investors along with its strong balance sheet in this time of pandemic,” she added.