In Q1, sales increased by 26.1%, EBITDA increased by 43.7% and net income decreased by 89.8%.
Sphera Franchise Group published their Q1 2019 report. According to it, the company observed an increase in sales of 26.1% YoY, amounting to RON 214.7m. Such an increase could be attributed to the growth in the sales of USFN Romania (KFC restaurants) which increased by 19.5%, contributing 15 p.p. in the sales growth. Further, USFN Italy (KFC restaurants in Italy) observed an increase in sales of 317%, contributing 7.7 p.p. to the sales growth. Next, CFF (Taco Bell restaurants) sales grew 126%, contributing 1.9 p.p. to the sales growth. Also, (Pizza Hut restaurants) sales increased by 7.3%, contributing 1.3 p.p. to the sales growth.
Sales (Q1 2019 vs Q1 2018) (RON m)
In Q1, operating expenses amounted to RON 191.9m, representing an increase of 33.2%. 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 food and materials. Excluding the impact of IFRS 16, operating expenses amounted to RON 192.9m, representing an increase of 33.9%.
As a result of the adoption of IFRS 16, rent expenses decreased by 62.3% amounting to RON 4.7m, while depreciation expenses increased by 232.2%, amounting to RON 16.2m. General and administrative expenses amounted to RON 13m, representing an increase of 5.0%. Excluding the impact of IFRS 16 adoption, G&A expenses amounted to RON 13.1m representing an increase of 6.0%.
Going further down the P&L, EBITDA amounted to RON 27.1m, which represents an increase of 43.7%. If we were to exclude the impact of IFRS 16, EBITDA decreased by 17.5%, to RON 15.5m.
When observing the company’s net financial result, Sphera recorded an increase in net financial loss from RON – 0.3m in Q1 2018 to RON -7.43m, in Q1 2019. The increase in loss could be attributed to the impact of IFRS 16 adoption (impact of RON 5m).
As a result of such change in net financial result, the company recorded a decrease in net income of 89.9%, amounting to RON 1.3m. Excluding the impact of IFRS 16, net income amounted to RON 5.1m, representing a decrease of 59.1%.