HOMEGROWN food giant Jollibee Foods Corp.’s (JFC) attributable profit dropped by half in the second quarter of 2019, dragged by losses in its recently acquired US burger chain Smashburger, alongside lower sales from Red Ribbon.
In a disclosure to the stock exchange on Monday, the listed company said net income attributable to the parent fell to P1.12 billion from April to June, 50.2% lower than the P2.25 billion it posted in the same period a year ago. This followed a 6.7% increase in revenues to P43.67 billion.
“Our profit challenges are short term, mainly Red Ribbon in the Philippines and Smashburger in the United States. Red Ribbon products will be in complete supply in September,” JFC Chief Finance Officer Ysmael V. Baysa said in a statement.
The Red Ribbon brand’s sales were affected by product supply shortage as it transferred its main production facility to a new location south of Metro Manila.
Excluding Red Ribbon, JFC’s same-store sales growth (SSSG) stood at 4.2% for the quarter. SSSG of Philippine brands in the US was at 8.3%; Vietnam’s was at 8.7%, while China’s stood at 3.5%. The Middle East and other parts of Asia posted an SSSG of 1.4%.
Meanwhile, Mr. Baysa said they introduced changes to Smashburger that would temporarily disrupt its sales and profits in the short term, but would boost the brand moving forward.
“These changes include permanent price reduction to replace temporary discounts and major product improvements to ensure higher product quality. Product SKUs (stock keeping units) were also reduced to simplify the menu to improve kitchen operations. We will also continue to open stores in very good locations,” Mr. Baysa said.
The company expects these extraordinary costs to decline starting next year.
On a six-month basis, JFC’s attributable profit went down by 34.4% to P2.66 billion, against P4.05 billion posted during the same period a year ago. Revenues, meanwhile, were up by 10.1% to P84.03 billion.
JFC opened a total of 170 stores from January to June, with 111 in the Philippines and 59 in overseas markets. This brought its store network to 3,195 in the country, under different brands such as Jollibee, Chowking, Mang Inasal, Greenwich, Red Ribbon, and Burger King.
The company now has 1,418 stores spread across China, the United States, the Middle East, parts of Asia, and the United Kingdom.
JFC recently acquired California-based coffee chain The Coffee Bean & Tea Leaf for $350 million. The firm is expected to start contributing revenues to JFC within 12 to 18 months after purchase.
Shares in JFC dropped 4.26% or P11 to close at P247 each at the stock exchange on Monday. — Arra B. Francia