Fast-food giant Jollibee Foods Corp. (JFC) on Monday said it had a restated net loss of P11.49 billion for the entire 2020, a reversal of the P7.3-billion income it posted in 2019.
The company said, however, its gains in the fourth quarter allowed it to pare its losses in 2020.
System-wide sales, a measure of all sales to consumers both from company-owned and franchised stores, fell 28 percent to P175.97 billion from the previous year’s P243.79 billion primarily as a result of permanent store closures and lower sales per store due to the Covid-19 pandemic.
The company was able to post an income of P2.04 billion in the fourth quarter alone, more than a third lower than the previous year’s P3.12 billion in income. The fourth quarter was the only time that the company posted an income following three consecutive quarters of loss in 2020.
System-wide sales for the quarter fell 32 percent to P49.54 billion from the previous year’s P72.72 billion.
The company re-stated its financial statements in 2019, adding a gain of P1.1 billion following the finalization of its third party valuation on its acquisition of the firm that owned The Coffee Bean and Tea Leaf.
JFC also said it was able to pare down the decline in revenues after it reduced its cost and improved its cash flow via its business transformation program.
Under the P7-billion plan, 4 commissaries and a total of 486 stores, of which 262 were covered by the program, were permanently closed. Headcount and operating and general and administrative expenses were significantly reduced in stores, supply chain facilities and support group offices. As a result, a total of P2.6 billion in annual savings are now being realized with full impact in 2021 and the years ahead, it said.
About P8 billion in capital expenditures were avoided last year and some of the budget were just delayed as part of the program’s objective to preserve cash as a precautionary measure during the business downturn at the height of the pandemic.
Of the budget for the program, it used P6.7 billion or 96 percent, some P4.7 billion of which were in cash spending while P2 billion represented write-off of book value of assets.
The unspent portion came mostly from lower-than-expected charges for pre-termination of leases mainly in North America. The cash savings payback period for the cash portion of the spending is estimated at less than 2 years with an internal rate of return of more than 50 percent.
“All of our regions generated recurring profit in the fourth quarter, led by the Philippines. We have significantly improved the Smashburger and The Coffee Bean and Tea Leaf businesses that they are now in a reasonable position to start generating profit in 2021. Our strong profit recovery shows our organization’s capability to execute complex and massive undertaking in a very short time like the Business Transformation,” Jollibee CEO Ernesto Tanmantiong said.
“It was a very difficult and painful program but the right thing to do for the long term good of the business and the organization.”
For the year, he said the company will open more than 400 new stores worldwide most of which will be outside of the Philippines, particularly in North America, Vietnam and China.
“In 2021 and the years ahead, JFC’s sales and profit growth will be driven by its international business. We believe that out of this pandemic, we will emerge as a stronger business and organization,” he said.
For the year, the company has allocated some P12.2 billion in capital expenditures to fund the opening of about 450 stores. The said amount is 22 percent higher than the actual spending in 2019 of P10 billion.
In 2020, the company spent P5.9 billion in capital investments, mostly for new stores. A total of 338 new stores were opened in 2020, 81 in the Philippines and 257 abroad.
For the first time in the company’s history, more new stores were opened abroad than in the Philippines led by SuperFoods of mostly Highlands Coffee in Vietnam at 115. CBTL opened 55; Yonghe King, 38; and Jollibee International at 36, of which Europe and Middle East at 20 and North America at 16.
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