Sphera published their 9M results yesterday, showing a 28% YoY decrease in sales, meanwhile EBITDA fell 32%. Finally, net loss amounted to RON -11m from RON 32m net profit in 9M 2019.
In the 9M period of 2020 Sphera posted sales in the amount of RON 502m, representing a 28% YoY decrease. The decrease was due to the COVID-19 pandemic and epidemiological measures made to prevent the spread of the virus.
EBITDA fell 32% YoY, amounting to RON 70m, due to lower revenue. The decrease was partially offset by lower costs related to payroll and employee benefits. Lower costs were fuelled mainly by state aid measures, reduced working hours and a lower number of employees in the period. Overall restaurant expenses in the 9M period were down by 22.8% due to lower cost of food & material (-30.1%, mainly volume related), payroll expenses (-33.1%), royalties (-27.8%), advertising (-31.5%) and rent (-12.2%).
Below the operating line, the net financial result deteriorated by 7% YoY to RON -13.8m due to higher interest expense. Finally, the bottom line turned negative amounting to RON -10.7m from last year’s net profit of RON 31.8m.
Although Sphera’s results do show a decrease on all lines, this should not come as much of a surprise when considering the environment in which they operated this year. However, there is a silver lining amid the 9M results. Despite the operating performance, Sphera was able to decrease their net debt by 4% since the beginning of the year which now amounts to 274.5m. Note that this translates to a manageable 2.3x EBITDA. Furthermore, Sphera was able to boost their cash flow from operating activities by 12.2%.
Restaurant wise, since the beginning of 2020 Sphera opened 4 new KFC restaurants in Romania (+1 relocation of a store based in Targu Mures), 3 new KFC stores were opened in Italy and 1 Taco Bell opened in Romania. As of September 30th, 2020, Sphera counted 158 stores. Also note that the company is currently in negotiations with YUM!, the Master Franchisor, to revise and update the restaurant development plan for KFC and Pizza Hut in Romania.
