Jubilant FoodWorks Q4 Results: Profit Falls, Margin Shrinks On High Inflation
Net profit of the country's largest food service company fell 71% year-on-year to Rs 28.54 crore in Q4.
Jubilant FoodWorks Ltd., the operator of Domino's Pizza and Dunkin Donuts, saw its fourth-quarter profit decline while high inflation in raw materials such as cheese, flour, milk, fats and oil weighed on its margins.
The consolidated net profit of the country's largest food service company fell 71% year-on-year to Rs 28.54 crore in the quarter ended March, according to a stock exchange filing. That compares with the Rs 76 crore consensus estimate of analysts tracked by Bloomberg.
Profitability was impacted because the company also took impairment charge of Rs 20 crore due to challenging economic environment in Sri Lanka with sustained inflation, depreciation of currency and depletion of forex reserves.
Jubilant FoodWorks Q4 FY23 Highlights (Consolidated figures, YoY)
Revenue up 8% to Rs 1,269.85 crore (Bloomberg estimate: Rs 1,290.8 crore).
Operating profit declined 14% to Rs 249.11 crore (Bloomberg estimate: Rs 279.1 crore).
The margin stood at 19.6% against 24.6% on higher expenses (Bloomberg estimate: 22.5%).
Total expenses rose 16% to Rs 1,205 crore during the quarter.
During the quarter, Domino's reported a decline in like-for-like sales of 0.6% as consumers in the world's most populous country have been feeling the inflation pinch with food prices shooting up, leaving them with little money to spend on discretionary categories like dining out.
While the decline in like-for-like sales is a first in at least seven quarters, the pace of growth has been slowing since the second quarter of FY23.
The average daily sales stood at Rs 81,430 in Q4 as against a high of Rs 86,945 in Q2 FY23, according to the company's investor's presentation.
Jubilant's single-digit revenue growth in Q4 is also the slowest since Q1 FY22. Revenues were hurt on account of high inflation, which impacted ticket prices, affecting growth in the second half of FY23, the company said.
Domino's revenue from the delivery channel, which comprises 63.6% of sales, rose 5.7% year-on-year. "The growth was order-led, partially offset by a decline in ticket," the company said. Dine-in, which accounts for 36.4% of sales, saw an 11.5% jump in revenue, led by an increase in orders.
Consumer engagement remained elevated, with quarterly app downloads at 8.5 million, up by 10.4%, and monthly active users rising 22% to 11.1 million over last year, the company said.
The enrollment in the loyalty programme—Domino’s Cheesy Rewards—grew by 28.3% versus the prior quarter to 13.6 million, and the loyalty order contribution reached 45% in March 2023.
The company added 61 stores during the quarter.
With the addition of 56 new stores and the entry of six new cities, Domino’s has expanded its network strength to 1,816 stores across 393 cities.
Popeyes and Hong’s Kitchen also opened one store each, taking their network tally to 13 stores each.
Three new Dunkin' coffee-first stores were opened. Eight out of 21 Dunkin’ stores are now as per the brand's new coffee-first identity.
"This quarter saw encouraging progress on registering order-led growth while limiting the impact of inflation on our gross margins through a series of well-timed interventions," said Sameer Khetarpal, chief executive officer and managing director at Jubilant FoodWorks.
"We are accelerating efforts to execute and deliver on the plans we’ve put into action to revert to high top-line growth while significantly improving all aspects of our cost structure."
For the full fiscal, the company posted a 17.3% increase in revenue at Rs 5,158.25 crore. "We are pleased that we have become a Rs 5,000 crore turnover company in this fiscal," Shyam S. Bhartia, chairman of the company, and Hari S. Bhartia, co-chairman, said in a joint statement.
"This achievement is a result of our never-ending efforts to elevate consumer experience through our portfolio of brands, not hesitating to make deep investments in commissaries and digital assets for continued future growth while maintaining very high financial discipline," they said.
Both of them, however, warned of near-term concerns around historic high inflation and slowing market growth.
The Board has recommended a dividend of Rs 1.20 or 60% per equity share of a face value of Rs 2 each for the financial year ended March 2023.
Shares of Jubilant Foodworks rose 2.57% on the BSE after the results were declared, as compared with a 0.77% decline in the benchmark Nifty 50.