Phil-Seven posts 92% profit hike

MANILA, Philippines - Phil-Seven Corp., the operator of the 7-Eleven convenience store chain in the country, reported a 92-percent jump in profit to P430.95 million in the first nine months of the year on the back of improved sales, higher margins and increase in other income.

In its financial report submitted to the Philippine Stock Exchange, Phil-Seven said total revenues grew 26 percent to P11.72 billion while system-wide sales, which represent sales of all corporate and franchise operated stores, expanded 29.6 percent to P12.5 billion, driven mainly by new store openings and improved average sales registered by mature stores.

At the end of September, the total 7-Eleven stores reached 937, mainly located in Metro Manila and in major towns and cities in Luzon. This represented an increase of 156 stores or 20 percent from the same period in 2012.

Out of the 937 outlets, about 69 percent are operated by third party franchisees and the remainder is company-owned.

Phil-Seven said while sales benefitted from better weather and a better economy, the bulk of the increase was due to the effects of the sin tax law on the tobacco business.

Marketing income continued to enhance the firm’s bottom-line as it posted a 14.6-percent hike to P205.3 million. This was attributed to suppliers’ support from various promotion programs.

Franchise revenues more than doubled to P1.049 billion from P487.4 million, boosted by new franchise operators. In addition, the restructuring of stores previously operated under service agreement to a franchise setup, resulted into a one-time increase in franchise revenues during the year.

“Management believes the company can sustain momentum moving forward to meet store expansion and profit goals. We however may do what we have to in the short term to protect and expand industry leadership in the long term, as rewards for market share are especially strong in the convenience store sector,” Phil-Seven said.

During the period under review, the company has put up a second distribution center in Cebu, its first venture outside Luzon, which is home to half of the country’s population.

Along with its 24/7 convenience, PSC also offers services including bills payment, phone cards, and top-ups. Aside from this, it allows customers to pay for selected online purchases with cash through any 7-Eleven store.

“We intend to grow services as new opportunities surface due to technological progress,” the company said.

It recently entered into a tie-up with major airlines and budget carriers that allows passengers to pay for tickets booked online at 7-Eleven stores. This latest innovation will be implemented in partnership with the firm’s third party payment processor ECPay.