Jollibee expects to keep lead in fast food race

ABS-CBN News

Posted at Mar 29 2017 01:26 PM

MANILA – Jollibee Foods Corp said Wednesday it was on track to maintain its lead in the fastfood industry, following concerns raised by some analysts over the rising cost of raw materials and its main competition.

The country’s largest fastfood operator told the stock exchange that it expected “strong” growth after doubling capital spending this year to P14 billion compared to the previous year.

Citing financial data from the second half of 2016, Jollibee said organic sales growth was at its highest in at least a decade.

Analysts at Macquarie and COL Financial had raised concerns about Jollibee’s ability to pass on higher costs to its consumers and new government regulations on contractualization.

Macquarie separately noted the growing threat from rival McDonald’s.

“The Jollibee Group of Companies has faced many challenges in the past. It had emerged stronger from these challenges and its profit recovered quickly,” the company said.

BPI Securities research head Haj Narvaez has a "buy" recommendation on Jollibee, saying its projected earnings growth of up to 18 percent would outpace the 9-percent expectation for the broader market.

"I don't see any revisions with regards to earnings," Narvaez told ANC's "Market Edge with Cathy Yang."

Shares of Jollibee were up 1.86 percent to P185.90 on Wednesday. The stock suffered four straight days of losses from late last week.

Jollibee said it expected the rate of increase in costs to slow this year compared to the last two years.

Two price increases last year in anticipation of higher costs this year “did not adversely affect” sales volume, the company said.

The company said it was taking “proactive steps to adapt to the changing requirements” in labor, “incurring costs” along the process since the third quarter of 2016.

The Jollibee brand’s system-wide sales are double the “next largest competitor,” the company said, adding sales are larger than the two biggest foreign competitors combined.