Jollibee posts profit growth in 2009, eyes better performance

Listed fast-food giant Jollibee Foods Corp. expects more robust growth this year after net earnings grew by almost a quarter to P813 million in the last quarter of 2009 due to lower raw material costs, more efficient marketing spending and lower income taxes. The company's earnings for the full year also increased by 14.6 percent to P2.66 billion from a year earlier as system-wide sales from company-owned and franchised stores went up by almost a tenth, Jollibee said in a statement on Thursday. "We look forward to a more robust growth in 2010 particularly in the Philippines and China, as we now have better products, price points, store quality, and marketing campaigns driven by even stronger organizations," Jollibee Chairman and Chief Executive Officer Tony Tan Caktiong said. Jollibee is spending P4.8-billion this year, almost double its 2009 expenditures. "In 2009, the company grew the business by almost 10 percent (sic), achieved its profit target and exceeded its cash flow objective. The results were strong overall, considering the stressed and changing economic conditions in markets where we do business," Tan Caktiong said. The fast-food giant said it had cut its working capital level and terminated marginally performing and mostly aging stores. System-wide sales went up by 9.6 percent to P63 billion last year. Caktiong sales growth in the fourth quarter last year was healthy for most brands in Asia where Jollibee operates, but said their US operations had been affected by weak consumer spending as a result of the global economic slump. Fo the fourth quarter alone, system-wide sales grew by a modest 5.4 percent to P17.4 billion. "The 5.4-percent sales growth in the fourth quarter versus last year was modest, resulting from mixed same-store sales growth among brands in different countries and the termination of some of our businesses in China," Tan Caktiong said. Jollibee closed its Chun Shui Tang Tea House in Shanghai, China, which was performing below expectations, as well as the Lao Dong joint venture in Taiwan due to a change of its expansion plans in China. The company opened 168 new stores worldwide last year, fewer than 186 in the prior year. It spend only P2.5 billion, 48 percent less than the original budget. Jollibee Chief Finance Officer Ysmael Baysa said the lower spending was done "as a matter of financial conservatism in the face of slowing economic growth." "The actions taken by management in 2009 against slowing economic growth contributed to Jollibee’s modest sales growth [and] brought strong profit and cash flow results," Baysa said. He added that the company was in an even stronger financial position to continue to make major investments in new stores and commissaries. Jollibee now has 1,557 stores nationwide, including its flagship Jollibee brand, Chowking, Greenwich, Red Ribbon, Delifrance, and Manong Pepe’s. It also operates 325 stores in China, the US, Vietnam, Brunei and Dubai, bringing the company’s total stores worldwide to 1,882. — Nikka Corsino/NPA, GMANews.TV