In 9M 2019, sales increased by 25.9%, EBITDA increased by 95.6% and net income decreased by 1.8%.
Sphera Franchise Group published their Q3 2019 report. According to it, the company observed an increase in sales of 25.9% YoY, amounting to RON 694.3m. Such an increase could be attributed to the growth in the sales of USFN Romania (KFC restaurants) which increased by 17.1%, contributing 13.2 p.p. in the sales growth. Further, USFN Italy (KFC restaurants in Italy) observed an increase in sales of 222.4%, contributing 8.6 p.p. to the sales growth. Next, CFF (Taco Bell restaurants) sales grew 183.6%, contributing 2.7 p.p. to the sales growth. Also, (Pizza Hut restaurants) sales increased by 7.1%, contributing 1.2 p.p. to the sales growth.
Sales (9M 2019 vs 9M 2018) (RON m)
In 9M 2019, operating expenses amounted to RON 604.8m, representing an increase of 26.8%. The increase in operating expenses could be mainly attributed to the increase in the cost of labor and an increase in other operating expenses while being partly offset by a decrease in the cost of rent. Excluding the impact of IFRS 16, operating expenses amounted to RON 606.1m, representing an increase of 27.1% YoY.
As a result of the adoption of IFRS 16, rent expenses decreased by 4.9p.p. amounting to RON 16.1m, while depreciation expenses increased by 253.2%, amounting to RON 52.1m. General and administrative expenses amounted to RON 42.3m, representing an increase of 12.3%. Excluding the impact of IFRS 16 adoption, G&A expenses amounted to RON 42.6m representing an increase of 13.2%.
Going further down the P&L, EBITDA amounted to RON 102.5m, which represents an increase of 95.6%. If we were to exclude the impact of IFRS 16, EBITDA increased by 28.3%, to RON 67.2m.
When observing the company’s net financial result, Sphera recorded an increase in net financial loss from RON – 1.9m in 9M 2018 to RON -12.8m, in 9M 2019. The increase in loss could be attributed to the impact of IFRS 16 adoption (impact of RON 6.4m).
As a result of such change in net financial result, the company recorded a decrease in net income of 1.8%, amounting to RON 31.8m. Excluding the impact of IFRS 16, net income amounted to RON 38.2m, representing a decrease of 17.9%.
