Jollibee Foods Corporation, one of the largest Asian food service companies, is expecting to post higher operating income growth this year after posting a 28.9 percent profit growth and deciding to reduce its expansion pace and capital expenditure budget.

In a disclosure to the Philippine Stock Exchange, the firm said it now expects operating income to grow 18 percent to 20 percent in 2024 from its original guidance of 10 percent to 15 percent.

This comes as Jollibee said this year’s store network will organically grow by six percent to seven percent from the original target of seven percent to eight percent, with capex declining to P16 billion to P18 billion from the initial P20 billion to P23 billion planned.

However, store network growth is seen to surge from 42 percent to 45 percent once it closes the acquisition of Compose Coffee of South Korea, which is also expected to boost store openings to 750 to 820 from the original guidance of 700 to 750 without the new business.

“As we move into the second half of the year, we remain focused on capital allocation discipline and prioritizing opportunities with the greatest growth potential that will give the best value for JFC and our shareholders,” said Jollibee Group Chief Financial and Risk Officer, Richard Shin.

He noted that “We are reducing our P23 billion CAPEX budget for 2024 by at least 20 percent, prioritizing our champion brands. Finally, the profit-accretive contribution from the consolidation of Compose Coffee will help further increase our cash generation. All these factors and considerations will improve our flexibility in funding and increase our leverage position.”

Meanwhile, Jollibee reported that its net income grew 28.9 percent to P5.66 billion in the first semester of 2024 from the P4.39 billion earned in the same period last year.

Systemwide sales (SWS) improved 11.3 percent to P182.63 billion from P164.13 billion, while revenues increased 10.9 percent to P128.52 billion from P115.88 billion.

Jollibee Group President and CEO Ernesto Tanmantiong said “The Jollibee Group’s momentum this year continues with excellent second quarter
performance. Our revenue grew by 10.6 percent led by the Philippine business which increased by 11.1 percent and International business which grew by 9.7 percent.”

Attributable net income increased by 30.8 percent to P3.04 billion from P2.33 billion.

SWS for the quarter rose 12.1 percent year-on-year to P95.8 billion, with the Philippine business’ Jollibee, Chowking and Mang Inasal brands outperforming their SWS targets. 

Its international business delivered strong second-quarter SWS with robust growth in EMEAA and North America. 

JFC’s coffee and tea business improved sequentially and year-on-year, led by The Coffee Bean and Tea Leaf® (CBTL) which grew SWS by 25.6 percent during the quarter.

The SWS of the flagship Jollibee Philippine business grew by 11.8 percent, while international business grew by 23.9 percent. EMEAA and North America grew by 28.0 percent and 18.9 percent, respectively. 

Same-store sales grew ahead of the industry both in the Philippines and internationally. The growth in the Jollibee Group’s SWS for the quarter was driven by a combination of same store sales growth (SSSG) (up 7.4 percent), new stores sales (up 3.6 percent) and changes in foreign currency (1.0 percent higher). 

Sales of digital channels, which include online sales and self-order kiosks accelerated, registering a growth of 22.4 percent driven by EMEA (195.4 percent), CBTL (35.6 percent) and Philippines (29.6 percent). Digital channel accounted for 21 percent of the Jollibee Group’s sales for the quarter.

SSSG of the Philippine business increased by 9.1 percent fueled by the strong demand from end-of-school year activities and special occasions (Mother’s AND Father’s Day). 

SSSG of the international business was mixed across regions and brands. EMEA grew by 16.8 percent driven by Jollibee Vietnam with SSSG of 20.2percent. In North America, Jollibee US and Canada grew by 15.7 percent and 10.3 percent, respectively, while Smashburger declined by 3.6 percent but improved sequentially. 

For the coffee & tea segment, CBTL posted growth of 11.4 percent, Milksha 6.8 percent and Highlands Coffee lower by 3.3 percent, indicating improving macros in Vietnam. 

China declined by 13.4 percent during the quarter due to weak consumer spending, reflecting overall industry trends. Overall, SSSG of the international business grew by 4.7 percent.

Shin said that, “Overall, our financial performance for the second quarter was even stronger than the first quarter across most metrics. Our top line growth translated to an all-time high operating income of P5.1 billion and a net income of P3 billion.”