The acquisition of Ling Nam and the continued expansion of its other brands resulted in a 48 percent jump in the first half net income of Fruitas Holdings Inc. (FRUIT), the leading food and beverage kiosk and community store operator.

In a disclosure to the Philippine Stock Exchange, the firm said earnings in the first half of 2023 rose P43.5 million from the P29.3 million generated in the same period last year.

Total net revenues breached the P1.1 billion mark in the first half of the year, driven by the same-store sales growth, business expansion, and the addition of the Ling Nam store operations.

“Our first half 2023 performance is proof of the Group's capacity to enhance and innovate its product portfolio. We saw improved profits and controlled margins despite the uncertain economic climate,” said FRUIT President and CEO Lester C. Yu.

He noted that, “in light of this, we are eager to seize the upcoming quarters' growth opportunities through store network diversification and relevant product offerings that will provide value to our customers and stakeholders.”

For the first half of 2023, FRUIT maintained a gross margin of 59 percent while the EBITDA (earnings before interest, taxes, depreciation, and amortization) margin settled at 14 percent due to tactical price increases to limit the effects of inflationary pressures and continues to capitalize on economies of scale. 

“Despite the hurdles, FRUIT still managed to improve its net income margin to 3.8 percent in the first half of 2023 compared to 3.7 percent in the same period the previous year,” the firm said. 

It added that, “the Group continues to monitor on and regulate its spending, which results in consistent profit and margins.”

FRUIT benefited from seasonal increase in demand for its beverages, specially in the second quarter of 2023, while it continued to expand its product line with complementary offerings to reduce seasonality.

Due to steady cash flow generation, the firm saw an increase in its cash and cash equivalents from P528.6 million at the end of 2022 to P605.2 million at the end of June 2023.

This will allow the Group to pursue its strategic ambitions more aggressively by expanding its network of stores, launching new products, and evaluating potential acquisitions. 

During the first part of 2023, Soykingdom Inc., through its fully-owned subsidiary Lingnam Food Inc., finalized the purchase of the Ling Nam Wanton Parlour and Noodle Factory. 

As part of its strategic retail network growth, FRUIT anticipates opening at least 10 additional Ling Nam outlets in the next 12 months. 

By the end of June 2023, FRUIT's network had a total of 822 stores. The Group anticipates opening at least 50 additional locations in the last two quarters of the year. 

FRUIT intends to keep up its rapid network development while retaining a smart and systematic approach to its growth.