SFG
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RON37.7
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Sphera Franchise Group triples its net profit in the first quarter of 2024

Key information Q1 2024 vs. Q1 2023:

  • Best Q1 in Sphera’s history in terms of sales, EBITDA and net profit
    • Consolidated sales continue to grow at strong pace, up 9.2%
    • Significant improvement of net profit, up 192%, to RON 21.4 million
    • Double-digit increase in EBITDA (+69%) to RON 39.8 million
    • Comfortable profitability, with an EBITDA margin of 10.9%
    • Minimum net debt/EBITDA ratio of 0.3

Bucharest, 15 May 2024. Sphera Franchise Group (stock symbol SFG), the largest group in the Romanian food service industry, continues its record-breaking streak and marks the best first quarter in its history in terms of sales, EBITDA and net profit. Higher turnover in all three countries where the Group is active led to a 9% increase in total sales in Q1 2024 compared to Q1 2023, to RON 365.9 million. EBITDA marked a significant double-digit increase (+69.1%) to RON 39.8 million and net profit almost tripled (+192%) to RON 21.4 million.

The good results obtained quarter by quarter demonstrate our ability to continue to grow the business while delivering performance. They are proof of the team’s efforts and dedication, and the effectiveness of our strategic initiatives. We are on target with our budget estimates for this year and confident that we will continue to create value for all our stakeholders. Over the year, we will strengthen our industry leadership position by focusing on identifying and capitalizing on opportunities to expand our unit network in smaller cities and shopping centers where we are not yet present and investing in digitalization, innovation, and remodeling of our current restaurants” said Călin Ionescu, CEO, Sphera Franchise Group.

KFC Romania remains the driver in the first quarter of this year, with sales of RON 268.8 million, representing a comfortable double-digit growth (+12.8%) compared to Q1 2023. The main indicators recorded notable performances. The restaurant operating profit increased by 58.3%, reaching RON 38.3 million at the end of March, and EBITDA surged by 64.8% to RON 35.4 million. Net profit doubled (+105.6%) to RON 23.9 million. Moreover, KFC Romania ended the first quarter with an excellent EBITDA margin of 13.2%. The brand continued its expansion with the opening of a new KFC restaurant in February in Sibiu.

KFC Moldova also had a good first quarter. Sales were up by 12.4% (approx. RON 5.5 million) and restaurant operating profit doubled (RON 1.3 million). The two restaurants in Chisinau continue to record extraordinary profitability, with an EBITDA margin of 23.8%.

Growth was recorded as well by KFC Italy, which had 5.7% higher sales (RON 43.3 million) in the first quarter and ended profitable in terms of EBITDA (RON 2.7 million).

Sales also increased for Taco Bell (+5.4% to RON 20.8 million) and, after breaking even last year, continues to remain profitable in the first quarter of 2024 (RON 0.37 million net profit and EBITDA of RON 1.5 million).

Pizza Hut contributed RON 27.4 million to total sales in Q1 2024, down compared to Q1 2023, amid the reorganization of the restaurant network, which continued in the first months of the year. The results of these actions are already visible, with restaurant operating loss down 22% in Q1 2024 compared to Q1 2023. In addition, Pizza Hut strengthened its portfolio, bringing the WingStreet sub-brand to the Romanian market in March.

On the cost side, Sphera continued the process of streamlining the business, with restaurant expenses growing at a significantly slower pace than sales, by only 4.7%. As a result, the share in total sales decreased by almost 4pp to 88% in Q1 2024 compared to Q1 2023.

The company ended the first quarter with a minimum net debt to EBITDA ratio of just 0.3.

We have recorded another quarter with notable results in both sales and profitability figures. We have outperformed ourselves, which shows that we have a strong team with a visionary plan, responsible and capable of performing. We have continued to be cost-conscious, expand in a sustainable manner, digitalise for both internal efficiency and improved customer experience, and innovate at portfolio and product level. The good results for this first quarter make us confident in our prospects for this year” said Valentin Budeș, CFO, Sphera Franchise Group.

For 2024, Sphera Franchise Group has budgeted double-digit increases compared to 2023 for the main financial indicators: restaurant sales of over RON 1.64 billion (+12.2%), a normalized net profit of RON 95.7 million (+20.1%) and normalized EBITDA of RON 189.8 million (+28.3%). The company has allocated around RON 69 million for development this year, for opening 6 KFC restaurants in Romania, remodeling existing units and implementing digital solutions.

SFG shares continue to outperform the market, with a 14% increase in the first three months of 2024 compared to a 10.8% increase for the BET index. Liquidity has tripled, with nearly 0.6 million SFG shares traded in Q1 2024.

Sphera Franchise Group shareholders approved a gross dividend of RON 1.05 per share at the OGSM on April 26, to be paid in June. The Company announced its intention to propose to shareholders a new dividend distribution, similar to the one approved in April, in the second half of 2024, depending on the status of achieving the budget presented by the Company and the market conditions.

Note: When analyzing the performance of the Group, the management focus is on the financial results that exclude the impact of IFRS 16. Therefore, the basis for the financial analysis is the results excluding IFRS 16.