Jollibee income slides 8.3% to P1.31B in H1

MANILA, Philippines - Fastfood giant Jollibee Foods Corp. (JFC) reported an 8.3-percent decline in net income in the first half this year to P1.31 billion as higher costs of raw materials as well as increased financing charges arising from debts related to acquisitions made a dent on its bottomline.

Revenues rose 15.3 percent to P29.55 billion while system-wide sales, a measure of sales to consumers both from company-owned and franchised stores, grew 15.6 percent to P39.21 billion.

Tony Tan Caktiong, JFC chairman and chief executive officer, said the increase in inflation rate continued to negatively affect consumer spending although to a lesser extent in the second quarter.   Sales growth in the Philippines improved from 13.1 percent in the first quarter to 16 percent in the second quarter, he said.

“We look forward to continued improvement in our sales growth in the Philippines in the second half this year, driven by better value through continued product quality improvement and through better in-store experience brought about by our store renovations. Our foreign businesses, our brands in China continued to become stronger. We look to even more significant growth in China next year and in the years ahead,” Tan Caktiong said.

JFC chief financial officer Ysmael V. Baysa said raw material prices rose seven percent in the first half this year compared with the same period a year earlier. 

In the second quarter, JFC posted a net profit of P693 million, down 6.8 percent from P743 million even as revenues increased 16.7 percent. System-wide retail sales likewise went up 16.5 percent to P20.46 billion.

Domestic sales improved 16 percent in the second quarter, largely due to the continued strong strong growth of its flagship brand, Jollibee and the acquisition of Mang Inasal.

Sales from overseas operations likewise increased 18.8 percent, led by China with a 26-percent growth rate, Middle East at 34 percent and Vietnam at 29 percent.

Baysa said the price adjustments implemented by the company were not yet sufficient to cover the increase in prices of raw materials and other costs of operations. “We project a stabilization of prices and some profit margin improvement in the second half of 2011,” he said.