Fruitas earnings up 41% in first quarter but pandemic still a threat

MANILA, Philippines — Listed food stall operator Fruitas Holdings Inc. on Tuesday reported "strong sales" in the first three months despite initial disruptions caused by the coronavirus pandemic, although second quarter earnings will likely bleed as the impact of the outbreak becomes more pronounced.

In a disclosure to the local bourse, Fruitas said consolidated net income in the first quarter hit P14.6 million, up 41% year-on-year as store sales posted an annual growth of 16% in the first two months.

"We experienced strong sales growth in the first quarter of 2020, although it was cut short by the quarantine," Lester Yu, company president and chief executive, said.

Fruitas' latest financial results only took into account the first two weeks of enhanced community quarantine in Luzon, which started in March 17 and prompted thousands of businesses to temporarily stop operations.

That said, the second quarter report is likely to reveal the full impact of the pandemic on the company's balance sheet. The government only started easing movement restrictions in several parts of Luzon in June. 

"The second quarter has been more difficult for us, but we look forward to reopening more stores, so the combined strength of our traditional channels and new revenue streams from delivery and partnerships can provide even better returns for our shareholders," Yu said.

According to Fruitas, the tough quarantine measures in mid-March forced the company to shut down most of its stores and sapped demand for its key products like fresh fruit shakes, already dragging down revenues in the first quarter by 11.5% to P374 million. 

But the decline in revenue was compensated by 15% decrease in operating expenses to P172 million, the company said.

Reduction of the company's debts also continued from January to March, with notes payable down to P176 million from P409 million recorded in June last year. As liabilities decrease, interest payments likewise fell,  which "contributed to better profitability," the company explained.

"(T)he cost containment measures we had earlier implemented, as well as our flexible cost structure, allowed us to cut costs to deliver higher net income in the first quarter of 2020 compared to 2019," Yu said.

On Tuesday, shares in Fruitas went up 0.77% to close at P1.31 each on the stock exchange, tracking a 1.68% uptrend of the main index.