Jubilant Foodworks Net Profit Drops By 25% To Rs 25 Crore

JFL's total revenue during Q4FY14 stood at Rs 433.73 crore against Rs 365.8 crore in Q4FY13 showing a growth of 18.56% on yearly basis. Further, for financial year 2014, the company posted a revenue of Rs 1736 crore with a revenue growth of 22.77%. The revenue growth during the year and quarter was chiefly driven by network expansion, promotional activity and new product introductions. New customers from cities where Domino’s Pizza debuted also added to its growth. The consumer sentiment has continued to weigh on the sector with SSG for the year standing at 1.6% and that during the quarter was -3.4%. Dunkin’ Donuts saw a confident roll-out across North India with new restaurants generating healthy consumer interest. “Get Your Mojo Back”, positioning has given the brand a distinct positioning translating into higher footfalls and sales.

On the expense front, JFL's total expenses during Q4FY14 stood at Rs 378 crore against Rs 304 crore in Q4FY13 showing a growth of 24.12% on yearly basis. The total expenses for FY14 too showed a growth of 26.78%. Wage hikes of team members in certain states and network expansion has resulted in growth of personnel expenses during the quarter. Raw materials have exhibited inflationary trends throughout the year, tapering off during the last quarter. Contributing to rise in manufacturing and other expenses were factors like hiked promotions and advertising, besides growth initiatives including new products and new restaurants. The development of Dunkin’ Donuts network also contributed to the acceleration in costs.

JFL's EBITDA in Q4FY14 was at Rs 55.68 crore with a yearly negative growth of 9.08% and EBITDA of Rs 249 crore for FY14 with a growth 3.28%. EBITDA performance reflected the deceleration in topline trends with a weaker SSG profile, whereas higher inflationary expenditure compounded the compression in margins. JFL's PAT during Q4FY14 stood at Rs 25 crore with a negative yearly growth 25.74% and full year PAT stood at Rs 118 crore for FY14 with a negative growth of 9.85%. The net profit showed higher contraction than EBITDA only because of higher depreciation charges during the year and quarter. The business showed muted profits given the weak macro-sentiment that is getting conveyed through a contraction in discretionary spends and surcharge on income tax increasing tax expense.

JFL also announced its outlook for network expansion with growth through restaurant additions in new and existing cities backed by upgraded expanded commissary network, target for the launch of 150 new Domino’s Pizza restaurants in FY15, while the corresponding target for Dunkin’ Donuts is at 25 new restaurants. Hence, we are still bullish on the company and recommend our readers to hold the positions in the stock for longer term gains.

The stock closed at Rs 1191 up by more than 3% on the bourses.