FAST -FOOD company Jollibee Foods Corp. on Monday said its income was cut in half during the second quarter of the year to P1.1 billion from the previous year’s P2.25 billion, dragged down by Red Ribbon’s transition to the new plant and losses from Smashburger in the United States.
The company said its income for the first half of the year ending June slid by a third to P2.65 billion, from last year’s P4 billion.
“These costs are extraordinary and are expected to be at a much lower level starting in 2020,” the company said.
Sales of Red Ribbon was adversely affected by product supply shortages as it transferred its main production facility to a new commissary located south of Metro Manila.
Full product supply is expected in September 2019, the company said.
Ysmael V. Baysa, the company’s CFO, said same-store sales continue to grow in the Philippines, according to its expectations as consumers gradually regained their purchasing power with increasing wages and lower inflation rate.
“In June 2019 same-store sales in the Philippines reached 5.7 percent including Red Ribbon, or 6.8 percent excluding Red Ribbon. Transaction counts or consumer visits to stores are rising,” Baysa said.
“Businesses abroad are strong, led by Vietnam, Philippine brands in the US, Yonghe King in China and Jollibee brand in new countries. Operating profit in the Philippines excluding Red Ribbon grew by 14.2 percent in the first quarter and by 15.3 percent in the second quarter, and is expected to keep this momentum in the months ahead. Our profit challenges are short term, mainly Red Ribbon in the Philippines and Smashburger in the United States,” he said.
On Smashburger, Baysa said they introduced major changes, such as price reduction, that created short-term disruption in sales and profit but will drive sustainable sales growth and strengthen the brand health.
The company ’s system-wide sales, a measure of sales to consumers both from company-owned and franchised stores, grew by 10 percent in the second quarter from last year.
Same-store sales in the Philippines grew 4.2 percent in the second quarter,1.4 percent in the first quarter, excluding Red Ribbon.
“The acquisition of Coffee Bean and Tea Leaf, when completed, is expected to add to our profit within 12-18 months of acquisition. We continue to aim to achieve the profit level in 2020 and in the years ahead that we set two years ago despite the profit challenges in 2019, which are short term and sustain our historical profit growth rate moving forward,” Baysa said.