MANILA, Philippines - Philippine Seven Corp., the local licensee of 7-Eleven convenience stores, reported a 10.1 percent increase in its net income in the first six months to P356.5 million.
Net income grew from P323.9 million on the back of higher retail sales which went up by 24.3 percent to P12.2 billion.
Phil-Seven also managed to grow its network of stores by 25.3 percent to 1,405 with franchised stores accounting for 61 percent of the total.
In the second quarter alone, the company opened four 7-Eleven stores in Davao City and Cagayan de Oro and two stores in Boracay.
Jose Victor Paterno, president and CEO of Phil-Seven, said the company would continue to expand this year.
The company is raising its capital spending budget by more than fifty percent to P3 billion to support its accelerated store expansion strategy.
Bulk of the P3 billion capex has been allocated for new store openings, store renovation and warehouse expansion.
“The rest of the country is relatively uncontested. We are virtually the only competitor with the critical mass to build out proper supply chains in areas logistically unreachable from GMA. Such supply chains come at a medium term cost in terms of underutilized warehouses, and for 2015 we will be operating 10 warehouses throughout Luzon, Mindanao, and three islands in the Visayas versus four in mid 2014,” Paterno said in his annual report to shareholders.
BPO or business process outsourcing trends would continue to drive growth in the remote urban areas of Luzon and the islands, he added.
Phil-Seven said rate of earnings growth was slower, which officials attributed to its capacity building expenditures.
The company has been expanding its logistics infrastructure to support its unprecedented expansion in Visayas and Mindanao.
“This will impact profitability in the medium term, in the form of underutilized warehouses, but is expected to benefit the company by achieving dominant position in new markets,” it said.
In 1982, the company acquired from Southland Corp. of Dallas, Texas the license to operate 7-Eleven stores in the Philippines. It became a publicly listed company in February 1998.