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Romania's Sphera Franchise H1 net profit falls 26.9%

Romania's Sphera Franchise H1 net profit falls 26.9% KFC

BUCHAREST (Romania), August 13 (SeeNews) - Sphera Franchise Group [BSE:SFG], the manager of KFC, Pizza Hut and Taco Bell brands in Romania, said on Tuesday its net profit fell 26.9% year-on-year to 13.7 million lei ($3.24 million/ 2.89 million euro) in the first half of 2019.

The reduction in the net profit margin, by 2.28 percentage points (pp) to 3.08% of sales in the first nine months of 2018, was partly offset by a 4.51 pp increase in the operating profit margin, Sphera Franchise Group said in a statement filed with the Bucharest Stock Exchange.

Sales of Sphera reached 445.6 million lei in the first six months of 2019, up 27.28% compared to the pro forma sales of the previous year. The increase was supported by stronger sales growth in the second quarter of the year, mainly coming from KFC Italy and Taco Bell as a result of the continuous growth in restaurant network.

Operational expenses rose to 394.7 million lei in the first half of 2019, an increase of 30.05% compared to prior-year figure.

"We are very pleased with the solid growth in sales achieved in the first half of this year; nonetheless, we are extremely committed to keeping costs under control so that we deliver our bottom-line target for the full year," SFG CFO Valentin Budes said.

In May, Dutch-held NN Group increased its shareholding interest in Sphera Franchise Group to 5.07% from 3.93% previously owned.

Sphera's net profit rose 4.5% year-on-year to 34 million lei in 2018, driven by a 4.5% rise in operating profit to 103.2 million lei. Its sales leapt to 771.2 million lei in 2018, up 24.6% compared to the pro forma sales of the previous year. The main driver of the increase was the growth of the sales of KFC Romania.

Shares of Sphera Franchise Group started trading on the Bucharest Stock Exchange (BVB) in November 2017, following a 285 million lei IPO. The company became the first food service operator listed on the exchange.

Sphera's shares traded 1.34% higher at 18.95 lei as at 0926 CET on Tuesday on the BVB.

(1 euro=4.7265 lei)