Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sphera Franchise Group SA (BSE:SFG, Financial) reported the best first half in its history in terms of sales, EBITDA, and net profit.
- The company achieved a significant reduction in restaurant expenses relative to total sales, decreasing by 3 percentage points.
- Net profit doubled compared to the first half of 2023, with a strong EBITDA margin of 10.7%.
- KFC Romania, a key asset, saw an 8.6% increase in restaurant sales, contributing significantly to the group's performance.
- Sphera Franchise Group SA (BSE:SFG) plans to distribute a gross dividend per share of RON1.05 from 2023 undistributed profit, rewarding investor confidence.
Negative Points
- Inflation remains a concern, with a slight increase observed in July, potentially affecting future costs.
- Geopolitical issues and potential economic slowdown pose risks to consumer spending and overall market conditions.
- Pizza Hut experienced lower sales due to a streamlining process, although improvements are expected.
- The company faces a tight labor market, with payroll and employee benefit costs increasing by 3.6% in H1 2024.
- Operational cash flow did not increase correspondingly with profit, partly due to different timing in supplier payments.
Q & A Highlights
Q: What is the reason behind the profit increase? Is this sustainable?
A: The profit increase is due to effective cost control measures and procurement negotiations, particularly keeping food and material costs flat. While this is not fully replicable in the second half, measures are in place to counterbalance pressures on poultry prices. - Valentin Budes, CFO
Q: Your revenue increased by 6% while your profit rose by 147%. What's the explanation for that? Is this logic reproducible? Why didn't the operational cash flow increase correspondingly?
A: The profit increase is due to cost control and timing of supplier payments. The operational cash flow was affected by a shift in payment schedules from December. - Valentin Budes, CFO
Q: What are the most significant risks for the second half of 2024, and how can you avoid the negative impact?
A: The most significant risks include macroeconomic factors such as political and electoral risks, inflation, economic slowdown, and fiscal changes. The focus is on mitigating their impact. - Valentin Budes, CFO
Q: Could you update us on the expansion plans and the CapEx associated with these plans?
A: The budget for 2024 includes opening five new locations, with CapEx for the year at RON69 million. Additional remodeling budgets are around EUR2.5 million. - CÄlin Ionescu, CEO
Q: Could you discuss the quarter-on-quarter performance during Q2 2024 versus Q1 2024?
A: The shift between Q1 and Q2 was due to timing of marketing campaigns and increased payroll costs. Despite these variances, the focus remains on achieving the annual budget targets. - Valentin Budes, CFO
Q: Could you comment on the dividends you intend to distribute in the second half of 2024?
A: A gross dividend of RON1.05 per share is proposed, with a general meeting of shareholders scheduled for October 7 to approve it. - Zuzanna Kurek, Investor Relations Manager
Q: Can you comment about the full budget numbers for full year 2024? Do you stand by those?
A: The guidance remains in line with the approved budget, despite potential headwinds. Confidence is high in achieving the budget levels. - Valentin Budes, CFO
Q: Can you detail your plans with Italy and acquisitions or development of new brands?
A: The plan for Italy is to open around three locations each year starting next year. The company is constantly looking for new brands to add to the portfolio. - CÄlin Ionescu, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
