The Philippines’ leading chained full-service restaurant, Shakey’s Pizza Asia Ventures Inc. (PSE:PIZZA), delivered recurring net income of Php386 million for the first six months of 2017, a 10% increase versus the comparable period last year. Net income grew primarily on the back of increasing the Company’s revenue base.
System wide sales rose by 18% to Php4.1 billion, driven by same store sales growth of 8% and an expanding local store network. Since the start of the year, PIZZA has added 11 new outlets, ending the first half of 2017 with a 195 Philippine store network.
As a result, the Company’s net revenues grew by 20% to Php3.4 billion versus the Php2.8 billion during the comparable period last year.
In terms of margins, that of recurring net income saw a decline of 100 bps to 11.4% due primarily to interest expense incurred by the Company beginning middle of 2016.
However, focusing on operations alone, PIZZA was able to improve profitability with gross profit and operating margins expanding by 120 bps and 180 bps respectively versus the same period last year. These were attributed to synergies implemented post acquisition by the Century Pacific Group and various price increases in anticipation of higher input costs.
As a result, gross profit and operating income grew by 26% and 34% respectively, with their corresponding margins at 30.1% and 17.6% during the first half. PIZZA was likewise able to maintain robust return on equity of 20% as of June 2017.
“On a year-on-year basis, our second quarter was slower than the first as we faced an extraordinarily high base last year. In addition, we had just ended the first quarter’s successful “2017 meal deal” promotion which boosted sales for what is a typically lean period for us. However, we are pleased to see that on a sequential basis, we continue to post revenue growth and profitability improvements,” said Vicente Gregorio, President and CEO of PIZZA. For the second quarter alone, the Company posted Php1.7 billion in revenues and Php307 million in operating incomes, growth of 3% and 7% respectively versus the first three months of this year.
“For balance of the year, we are expecting a more competitive environment that is likely to put pressure on sales growth. The Philippines has become an attractive market for old and new entrants to participate in more aggressively, and we are preparing various products and marketing initiatives in response,” said Gregorio.
He added, “Nevertheless, given what we have already achieved in the first half and an easier bottom-line comparable period in the second, we remain positive about achieving our full year targets.”
Apart from the Philippines, PIZZA also owns the perpetual rights to the Shakey’s brand for the Middle East, most of Asia, China, Australia, and Oceania. In the third quarter, it is set to open its first international store in Kuwait having signed a development agreement for the construction of at least 10 Shakey’s outlets in the region within a span of 7 years.
It also recently signed another area development agreement to build at least 10 Shakey’s Pizza outlets in the United Arab Emirates (UAE) over a span of 5 years. The first store, to be located in Dubai, is scheduled for opening in the first half of 2018.
Shakey’s has been creating over 40 years of great times and great memories in the Philippines. Having started its first store in Metro Manila in 1975, Shakey’s now operates nationwide with a store count of 195 stores. Shakey’s is one of the leading operators of Fast Casual Restaurants in the Philippines, focused on family casual dining. It maintains market leadership in both the chained pizza full-service and chained full-service restaurant categories. Shakey’s believes its superior value arises from its differentiated menu offerings, high-quality products, and a mission to consistently provide great times and great memories to every Shakey’s guest.