food works+ +earnings+release

8/8/2019 Food Works+ +Earnings+Release

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Jubilant FoodWorks Limited, Q3 & 9M financial release 1

Jubilant FoodWorks Limited

Current HighlightsQ3 Total Income at Rs. 1173.6 million, up by 50.4%

Q3 Net Profit at Rs.113.7 million, up by 542%9M Net Profit at Rs. 225.7 million, up by 547%

Successfully concluded IPO - priced at Rs. 145 per shareStrong operating upside visible

Guidance- FY2010Total Income anticipated at Rs.4150-4200 million

EBITDA expected at ~ Rs. 650 millionPAT expected at ~Rs.320 million

Jubilant FoodWorks Limited (JFL) , a leading food service company and MasterFranchisee of Dominos International* reported its financial results for the quarter andnine-months ended December 31, 2009.

Financial Highlights Total Income: Q3 FY2010 up 50.4% to Rs. 1173.6 million ; 9M FY2010 up 45.2% to Rs.

3001.1 milliono Same store growth largely driven by deeper penetration and increase in number

of orderso Continued new store openings

EBIDTA : Q3 FY2010 up 123.6% to Rs.197.2 million ; 9M FY2010 up 113.0% to Rs.471.4 milliono EBITDA margin in Q3FY2010 stood at 16.8% as compared to 11.3% in Q3FY2009o Growth in EBIDTA driven by robust sales recorded during the quarter coupled

with the sustainable cost efficiency measures adopted at every level of operation PAT: Q3 FY2010 up 542.0% to Rs. 113.7 million ; 9M FY2010 up 547.0% to Rs. 225.7

milliono PAT margin in Q3FY2010 stood at 9.7% as compared to 2.3% in Q3FY2009

Successful IPO: The Company concluded its IPO successfully pricing it at Rs145 pershare making it the first food service company listed in Indiao IPO oversubscribed over 31 times

Chamber no. 1517, 15 th floor, Devika Towers, 6 Nehru Place, New Delhi -110 019

Immediate release New Delhi, February 05, 2010


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o Listing on 8 February 2010o Market cap of about Rs. 9225.2 million at issue priceo

Witnessed demand from high quality investors all investor categories of theIPO were oversubscribed

o Strong endorsement from anchor investors including Arisaig Partners, Blackrock,Canara Robeco MF, Capital World, Fidelity, Franklin Templeton, HSBC,Prudential, Reliance MF, SBI MF, T Rowe Price and Ward Ferry

o Funds raised by Company to be utilized for repayment of debt and othercorporate initiatives

Operating Highlights New store openings : Q3 FY2010 16 new stores; 9M FY2010 opened 55 new stores

o Total Stores as on 31 December 2009 at 296 ; was 228 as on 31 December 2008o Same store growth in Q3FY2010 23.1% ; was at 7.9% in Q3 FY2009

System sales growth in Q3 FY2010 was 50.2% City/Town coverage: number of cities covered as on 31 December 2009 at 65. Was 43

as on 31 December 2008 Two new products launched to a good response: Choco Lava cake and Pasta

offerings Re-introduced Pizza Mania, a low priced pizza offering leading to higher volumes

Guidance for FY2010 Total income to range between Rs.4,150-4,200 million EBITDA expected at ~Rs. 650 million FY2010 PAT expected at ~Rs.320 million

* Dominos International refers to Dominos Pizza Overseas Franchising B.V., Netherlands

Commenting on the performance for Q3 FY2010, Mr. Ajay Kaul, CEO, JubilantFoodWorks Limited said, Over the last several years we have invested considerable time,effort and capital to build a very successful food-service model bringing change to the way theIndian consumer perceives certain food segments. We are today an established, national, profitable and growing business and we are delighted to have concluded a very successful IPO,and we warmly welcome our new shareholders to be a part of the future progress at JFL. Our model is now tried and tested and we are on a solid path of growth with critical size andoperating components in place. We remain focused on service and delivery and the thrust going forward will be on a higher penetration, innovative customer engagement, increasing repeatorders and improving store profitability. Our results for the quarter and year-to-date indicatecontinued strong earnings and cash flows and better performance across key operating matrices.The outlook going forward is even brighter and we expect our performance momentum to sustainin the future.


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Result details

Total Income

In Q3 FY2010 the Total Income grew by 50.4% to Rs. 1173.6 million from Rs. 780.3million. The improvement in performance was driven by the following factors:

Higher new store openings: Q3 FY2010 saw 16 new store openings with the totalnumber of stores standing at 296 as of 31 December 2009.

Increase in orders received by the stores on account of higher penetration levels andincreased orders.

Improved same store sales: Q3 FY2010 saw same store growth of 23.1% from 7.9% inQ3 FY2009.

Innovative products launched such as Choco Lava cake and Pasta have added to the

growth in sales.

Same Stores refer to stores that have been in operation for both the years under reviewentirely. Going forward, the growth of Same Stores sales will contribute even morerobustly to overall sales as the number of stores keep increasing.

In 9M FY2010 Total Income was at Rs. 3001.1 million from Rs. 2067.3 million.

Expenditure

Particulars Q3FY2010Q3

FY2009 Shift (%)9M

FY20109M

FY2009 Shift (%)

Income from Sales 1,171.4 779.8 50.2 2,998.8 2,066.1 45.1

Other Income 2.2 0.49 356.7 2.4 1.2 95.7

Total Income 1173.6 780.3 50.4 3001.1 2067.3 45.2

Particulars (Rs. mn) Q3FY2010Q3

FY2009 Shift (%)9M

FY20109M

FY2009 Shift (%)

Raw Material andProvisions Consumed 289.8 197.3 46.9 737.5 525.0 40.5

Personnel Expenses 215.7 150.4 43.4 559.6 399.1 40.2Manufacturing andOther Expenses 470.9 344.4 36.7 1232.6 921.9 33.7

Total Expenditure 976.4 692.1 41.1 2529.7 1846.1 37.0


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In Q3 FY2010, the Total Expenditure stood at Rs. 976.4 million from Rs. 692.1 million andwas led by new store openings and increased sales from same stores.

The largest increase to cost was on account of Raw Material and Provisions Consumed,this increased 46.9% to Rs. 289.8 million from Rs. 197.3 million. This covers the cost ofcheese, chicken and other raw materials consumed while manufacturing food products.Most of the ingredients used in pizzas are subject to price fluctuations based on demandand seasonalitys. The Company has a very effective cost control mechanism activated atthe store level itself that helps it contain cost on this account. Traditionally the costincrease of Raw Materials has been passed on to the customers.

Personnel Expenses were at Rs. 215.7 million in the quarter from Rs. 150.4 million andthe increase was on account of routine increment in salaries and allowances paid and anincrease in the number of employees itself.

In Q3 FY2010 the Manufacturing and Other Expenses were at Rs. 470.9 million from Rs.344.4 million. These included expenses towards rent, cost of power & fuel, franchise feepayable to Dominos International, marketing expenses and general and administrativecosts.

In 9M FY2010 the Total Expenditure increased to Rs. 2529.7 million from Rs. 1846.1million on account of growth in the operations. The primary reason for the increase was

the rise in Raw Material and Provisions Consumed stood higher at Rs. 737.5 millionfrom Rs. 525.0 million and the rise in Personnel Expenses which stood at Rs. 559.7million from Rs. 399.1 million.

EBITDA


FY2009 Shift (%)9M

FY20109M

FY2009 Shift (%)

EBITDA 197.2 88.2 123.6 471.4 221.3 113.0

Margins 16.8% 11.3% 550bps 15.7 10.7 500bps

In Q3 FY2010 the EBITDA increased to Rs. 197.2 million from Rs. 88.2 million. Thisfollowed robust improvement in store sales and keen focus on cost management thathelped keep key operating costs under check. EBITDA margins in Q3 FY2010 were at16.8% -growing 550 bps from 11.3% in Q3 FY2009. There is a sustained momentum inearnings in line with enhanced size of operation.


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In 9M FY2010 the EBITDA was at Rs. 471.4 million from Rs. 221.3 million. Thecorresponding EBITDA margins were at 15.7% from 10.7% last year. This implied a

growth of 500 bps.The Company expects the EBITDA performance to sustain going forward with greatercontribution from same store sales, spread out absorption of overheads and continuedcontrol of operating costs.

Interest CostIn Q3 FY2010 Interest expenses stood at Rs.20.8 million as compared to Rs.24.7 million inthe same period last year. The decline witnessed was largely attributable to reduced costof borrowings coupled with overall reduced borrowings.

For 9M FY2010 the Interest cost was Rs.71.5 million as against Rs.59.9 million for 9MFY2009.

Profit after Tax


FY2009 Shift (%)9M

FY20109M

FY2009 Shift (%)

PBT 114.3 19.5 485.2 226.3 40.3 462.0

Margins 9.7% 2.5% 720 bps 7.5% 1.9% 560 bps

PAT 113.7 17.7 542.0 225.7 34.9 547.0

Margins 9.7% 2.3% 740 bps 7.5% 1.7% 580 bps

In Q3 FY2010 Profit After Tax was noticeably up at Rs. 113.7 million from Rs. 17.7million given strong operating growth. The PAT margins were at 9.7% in the quarterfrom 2.3% earlier.

In 9M FY2010 the Profit After Tax stood at Rs. 225.7 million from Rs. 34.9 million in 9MFY2009. The corresponding PAT margins were at 7.5% and 1.7% respectively.

Jubilant FoodWorks Outlook

JFL is confident of delivering such strong growth-oriented performance on a sustainablebasis going forward. Over the last several years the Company has developed a uniquemodel for the Indian market that is now well established, profitable and growing. Thenascent business risks are behind the Company and the focus now is on achievingsustainable and solid growth. The Company has very healthy cash flows fromoperations which it is deploying to drive growth going forward. Expansion through


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Jubilant FoodWorks Limited: Brief Overview

IntroductionJubilant FoodWorks is Indias premier food-service company. It operates Dominos Pizzastores in India and Sri-Lanka (through a sub-franchisee). The Company is the largestpizza chain in the country and fastest growing MNC chain in terms of growth of numberof stores. In each of the last three years JFL has received the Distinguished AchievementAward of the International Franchise Association from Dominos International as thefastest Dominos franchisees in the world.There are four Company-owned regional supply chain centers or commissaries thatsupport the network of JFLs stores. The focus on the logistics helps JFL attain consistentquality, beget better prices from vendors and ensures time-bound delivery of articles tothe stores.

Key Business Perspectives

Exclusive franchisee and support of a globally successful brand: JFL operates its pizzastores pursuant to a Master Franchise Agreement with Dominos International, thusproviding it with an exclusive right to develop and operate Dominos Pizza deliverystores and the associated trademarks in the operation of pizza stores in India, Nepal,Bangladesh and Sri Lanka. Such an association provides JFL with technical, marketing

and operational expertise to compete successfully with other restaurants in the QuickService Restaurants (QSR) industry in India. The term of the Master FranchiseAgreement continues until December 31, 2024 and is renewable for a period 10 years.Dominos Pizza in the U.S was founded in 1960 and at present spans across the globewith a network of over 8,500 pizza stores in more than 60 countries.

Excellent project management: JFL has a robust store selection process based on factorssuch as location visibility, presence of competition, household count as well as presenceof corporate and other institutions. A complete return-on-investment analysis

determines the feasibility of a store. An efficient internal project management ensuresthat the store opening time ranges between 35-45 days on average from the date ofpossession of the premises. The current pace of growth has been sustained due togreater penetration, increased orders, launch of new stores and higher same storegrowth.

Cost consciousness: JFL lays strong emphasis on developing a culture of responsibilityfor costs at every level. All costs attributable to a store are charged at the store-level andthe store manager has discretion to take actions in order to increase sales or reduce costs.


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Moreover the policy of centralized sourcing from an optimal number of vendors furtherfacilitates cost efficiencies enabling the Company to reduce its manufacturing costs.

Reviews are undertaken through monthly and quarterly meetings of store and districtmanagers in different regions to review store-wise performance based on various costparameters. As part of the cost containment plan JFL undertakes a ROI analysis prior toopening a store to determine the financial feasibility of the store.

Robust supply chain: The Company operates four regional supplycenters/commissaries located at Noida, Mumbai, Bangalore and Kolkata. These centresensure a timely delivery of raw materials and helps maintain consistency in quality. JFLhas centralised its purchasing, sourcing, warehousing and distribution of raw materials,as well as the production of dough at its commissaries; this reduces the storage spacerequired at the store level, thus minimizing store operating costs. JFL has made keyinvestments in strengthening its logistics, which is a key growth attribute for theCompany.

Operational excellence: Standardized internal processes and strong operationaldiscipline have contributed to JFLs sustainable growth. The base of the Companysoperational success is its employee training programs which are holistic in nature andcover every aspect of the stores operations. Great emphasis on general hygiene, safety,as well as branding of the stores and other key areas has enabled JFL to achieve efficient

compliance levels resulting in operational discipline which plays a key role in customersatisfaction and overall success. JFL has been able to ensure the average delivery time of22.50 minutes for an order across its operations as against customer guarantee of 30minutes.

Robust Training structure : Employees of JFL are a critical link between the Companyand its customers and hence and it seeks to develop employee skills that will enhancetheir work experience by providing continuous training, as well as providingappropriate rewards and recognitions to them. JFL has in place a comprehensive

training program, which is structured to provide a growth path for all its employees,from trainees to store managers, and has a dedicated training ace for each store, withregional trainers and a dedicated training facility in each major city in which it operates.

Consumer focused and innovative marketing: The Companys marketing strategyseeks to leverage on the strength of the Dominos brand to establish a distinctive imagein the minds of our customers of quality, reliability, value for money, variety andcustomer service. It uses three distinct marketing platforms, (a) national marketing


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campaigns on television, print and radio, (b) local store marketing and (c) customerrelationship management.

Positive cash flows from operations: Given our strong operating model, each storeremains positive at operating level. Moreover, the Company in the past has operatedwith negative working capital mainly due to (i) minimal receivables (ii) faster inventoryturnover rates as compared to normal payment terms on current liabilities. Moreover thebusiness is not seasonal in nature and further limits the Companys working capitalrequirements. Such factors enable the Company generate positive cash flows at theoperational level.

Key achievements and awards received in the past Rated 9 th among 25 companies in the Hewitt Best Employers in India 2009 Study Rated among the Best Employers in Asia in the Hewitt Best Employers in the Asia

2009 Study Received the Best Employer Brand Award (Hospitality) from the Employee

Branding Franchising World. Award for Excellence(Customer Service) in Franchising and Business Development

by the Franchising World Ranked 17 th in the Indias Top Marketers Award 2009 instituted by Pitch and the

exchange4media group Of the 21 Brands listed as Game Changers of the Decade by Brand Reporter in

October 2009 In 2008, received the highest score in Employee Engagement, Training and

Development, HR Function and Work Life Balance in The Best Companies toWork for in India: 2008 Study conducted by Business Today TNS Mercer

Received the Distinguished Achievement Award of the International FranchiseAssociation in 2008

Rated 16th among 25 companies in the Hewitt Best Employers in India 2007 India2007 Study

Rated among the Best Employers in Asia in the Hewitt Best Employers in the Asia2007 Study

Received the highest score in Employee Engagement, Training and Development,Satisfaction, Pay, Leadership Practices and Performance Management Processin The Best Companies to Work for in India: 2007 Study conducted by BusinessToday TNS Mercer

Received the Distinguished Achievement Award of the International FranchiseAssociation in 2006 and 2007


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Marketing Excellence Award by Dominos International in recognition of superiorperformance for Best New Product Launch and Advertising Campaign in 2006

Effies 2005 Silver Award for the 30 minutes or free television commercial Award for Excellence in Franchising, Licensing and Business Development by The

Franchising World 2004 and 2005

About us:

Jubilant FoodWorks Limited (JFL) is primarily a food-service company and currentlyoperates Dominos Pizza stores in India and via a sub-franchisee in Sri Lanka. TheCompany was incorporated in 1995 and initiated operations in 1996. At present JFL isone of the largest food service companies in India with a network of 296 stores (as of 31December, 2009) pan India and 5 stores in Sri Lanka.

The Company is the market leader in the organized pizza home delivery segment inIndia with over 65% market share. JFL focuses on a home delivery and takeawayoriented business model, which offers its customers the convenience of eating in thecomfort of their own homes and workspaces.

JFL operates its stores pursuant to a Master Franchise Agreement with Dominos

International, which provides it with the exclusive right to develop and operateDominos Pizza delivery stores and the associated trademarks in the operation of storesin India, Nepal, Bangladesh and Sri Lanka.

For more updates and information on the Company, please log on towww.dominos.co.in

For further information please contact:Ravi S. Gupta

Jubilant FoodWorks LimitedTel: +91 120 4090 509Fax: +91 120 4090 599

E-mail: [email protected]

Siddharth Rangnekar / Urvashi Butani

Citigate Dewe RogersonTel: +91 22 4007 5005 / 5003Fax: +91 22 2284 4561Email: [email protected]

[email protected] statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risksand uncertainties like government actions, local political or economic developments, technological risks, and many other factors thatcould cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. JFL will not bein any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.


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