SFG
0.79%
RON38.3
Share price

Sphera Group achieved record financial results in 2023: sales of RON 1.47 billion and a normalized net profit of RON 79.8 million

Highlights: 

  • 2023, the best year in Sphera history: sales of RON 1.47 billion (+11.1% YoY), normalized net profit of RON 79.8 million (+80.3% YoY) and EBITDA margin of 10.1%
  • KFC Romania exceeded RON 1 billion in sales in 2023
  • Q4, another record quarter in terms of sales, EBITDA and net profit
  • Noteworthy EBITDA margins in Q4 for KFC Romania (15.7%), KFC Moldova (20.2%) and Taco Bell (11.7%), while the Group-wide rate reached 13.5%
  • In 2023, SFG shares were the 3rd best performer in the BET index, the total stock return in 2023, including the dividends paid, significantly outperformed the BET-TR index

Bucharest, February 29th, 2024 – Sphera Franchise Group (stock symbol SFG), the largest group in the food service industry in Romania, closed its best year ever, with sales of RON 1.47 billion and improved profitability indicators – normalized EBITDA up 44.1% compared to 2022, at RON 147.9 million, and normalized net profit up 80.3% compared to the previous year, at RON 79.8 million.

2023 was a year full of achievements. We continued to grow and opened 8 new units, became the first local chain to reach the 100 restaurants mark, brought varied menu innovations, optimized and became more efficient. All the while, we have remained a benchmark for sustainability. And challenges were present – we faced high inflation, unexpected tax increases and a tight labor market. But the results are in line with the extraordinary work of over 5,100 colleagues in Sphera – we have record sales and remarkable increases in profitability indicators. This year is also marked by uncertainty, but I am confident that our 30-year experience will sustain our growth trend and we will continue to bring good news in 2024,” stated Călin Ionescu, CEO, Sphera Franchise Group.

The biggest contribution to Sphera Group’s outstanding financial results last year was made by KFC Romania, which exceeded the RON 1 billion sales in 2023, an increase of 12.5% over 2022. On the course of an excellent fourth quarter 2023, with an EBITDA profitability margin of 15.7%, the Group’s flagship brand ended the year with a net profit of RON 86.8 million (+26.5%).

Another outstanding performing brand was Taco Bell, which reached break-even and ended 2023 with a profit, as a result of 22% higher sales and triple-digit increases in restaurant operating profit (+148.6%) and EBITDA (+139.3%). Also for Taco Bell, the final quarter of 2023 was notable, with an EBITDA margin of 11.7%.

KFC Italy also became profitable in 2023, with a net profit of RON 3 million, in a year with EBITDA growth of 436%, and a margin at a comfortable 9.4%.

KFC Moldova, with its two restaurants in Chisinau, again performed excellently, with a net profit of RON 2.8 million (+42.6% compared to last year). The units operated by Sphera in Moldova had double-digit growth in 2023, on all important indicators: sales (+18.4%, to RON 20.59 million), operating profit at restaurant level (+42.5%, to RON 3.78 million), EBITDA (+35.2%, to RON 3.66 million). And, for KFC Moldova, the fourth quarter of 2023 was remarkable, with an EBITDA margin of 20.2%.

Pizza Hut accelerated its efficiency process in the last quarter of the year with a network streamlining that focused on the Pizza Hut and Pizza Hut Delivery brand alignment and it is expected to see the positive effects of this reorganization in the medium term.

The good results at the company level are due to higher sales volumes, effective pricing strategy and rigorous cost control measures. Despite rising costs and additional fiscal pressures (taxes and minimum wage increases), through proper management, restaurant expenses have increased at a slower pace than sales. As a result, Sphera achieved a 45.7% higher restaurant operating profit in 2023 compared to 2022. The company closes the year with a comfortable level of profitability, with an EBITDA margin of 10.1%.

Q4 2023 continues record-breaking series

An important contribution to the final results for 2023 was provided by the fourth quarter, the best quarter ever in terms of sales, EBITDA and net profit. Sphera also registered excellent increases in restaurant operating profit and a notable EBITDA margin of 13.5%.

“The financial results achieved in 2023 consolidate Sphera Group’s position as a leader in the food service industry. In addition to the impressive sales figure, the performance also comes from the fact that we recorded double and even triple-digit increases for most indicators and across the brands. It is the result of a strategy that we have consistently pursued based on efficiency, effectiveness, rigorous cost management and smart pricing. We are pleased to see that our efforts are also validated by investors confidence, with Sphera share price rising significantly above the evolution of the BET index. In 2024, we will continue to implement the measures and actions that have sustained our growth trend, for the benefit of our shareholders, customers, team and all our partners,” stated Valentin Budeș, CFO, Sphera Franchise Group.

In the last quarter of 2023, Sphera recorded revenues of RON 394.4 million, 6.8% higher than in Q4 2022. Profitability indicators recorded double-digit growth rates – restaurant operating profit: +32.1%, EBITDA: +21.3%, normalized profit: +28.7% compared to the same period in 2022.

Excellent evolution of shares on the Bucharest Stock Exchange

SFG shares continued their positive evolution in Q4 2023, with an increase of 24.2%, the best performance among all companies included in the BET index. Considering the dividend paid to shareholders on October 10th, the total return on SFG shares in Q4 2023 was 29.8%.

In 2023, SFG shares were the 3rd top performer from the BET index, appreciating 83.6% and significantly outperforming the BET index, which grew 31.8%. The total return on SFG shares in 2023, including the dividends paid on March 31st, 2023, and October 10th, 2023, was 95.5%.

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.