In H1 2023, SFG recorded revenue growth of 14.8% YoY, an EBITDA increase of 146.5%, and a net profit of RON 19.4m (H1 2022: RON -8.7m).
In total, the restaurant sales revenue amounted to RON 695.6m in H1 2023, representing an increase of 14.8% YoY. Growth was reported across all of the markets as well as brands in the Company’s portfolio. Breaking this down by regions, most of the revenue (86.3%, or RON 600.5m) was generated in Romania, followed by Italy (12.3%, or RON 85.3m), and the Republic of Moldova (1.4%, or RON 9.8m). In terms of brands, KFC recorded the largest revenue, at RON 595.9m (85.7% of the total), increasing by 15.4% YoY, followed by Pizza Hut at RON 59m (8.5% of the total), with an increase of 1.7%, and Taco Bell, at RON 40.7m (5.8% of the total), with an increase of 29.1% YoY.
Moving on, the Company noted that after a challenging 2022, restaurant expenses weight in sales decreased by almost 5 p.p. YoY, amounting to 91.3%. In terms of the restaurant expenses themselves, they amounted to RON 634.9m, an increase of 9.2% YoY. All the cost categories increased, with the main contributions coming from food and material costs (+7.2% YoY, to RON 232.8m), employee expenses (+15.2% YoY, to RON 163.3m), and this came as a result of the increase in payroll and employee benefits, but also due to a 4% increase in the number of employees. Rent expenses also grew, increasing by 13.2% YoY to RON 50.5m, due to the larger restaurant footprint and the variable structure of the rent contracts, which are tied to sales development. Royalties and advertising also grew, by 14.5% YoY, and 8%, respectively. Finally, other operating expenses amounted to RON 91.7m, a 3.1% increase YoY, due to the stabilization of third-party and utility costs, the largest contributor to this category.
Next up, there is EBITDA, which amounted to RON 52.3m, an increase of 146% YoY, supported by the faster revenue than expenses growth. SFG further notes that this was also supported by the correct pricing strategy besides the increasing sales volumes. As such, the EBITDA margin also improved, increasing by 4.47 p.p. and amounting to 7.53%.
In terms of the net financial result, it amounted to RON -5.2m, an 18% improvement YoY, as the financial expenses decreased by 7% and amounted to RON 6.2m, while the financial income increased by 191% YoY and amounted to RON 1m. Taken together, all of this led to a net profit of RON 25.2m, while in H1 2022 it was negative at RON 7.2m. This would also mean that the net profit margin turned positive and amounted to 3.62%, an improvement of 4.64 p.p. YoY.
Sphera Franchise Group key financials (H1 2023 vs. H1 2022, RONm)
Source: Sphera Franchise Group, InterCapital Research