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Jubilant FoodWorks Q4 profit falls on note ban

LiveMint logoLiveMint 29-05-2017 Sounak Mitra

New Delhi: Jubilant FoodWorks Ltd, which operates Domino’s Pizza and Dunkin’ Donuts outlets in India, on Monday said net profit dropped in the quarter ended 31 March because of the lingering impact of demonetisation.

The impact was partly countered by an increase in online ordering “and incremental revenue due to addition of new restaurants,” the company said in a statement to the stock exchanges.

Net profit fell 75.9% to Rs 6.7 crore in the March quarter from Rs.27.8 crore in the year-ago period. Operating revenue in the quarter was Rs 612.8 crore, compared with Rs 618.05 crore in the year-ago period. Total expenditure in the quarter increased by 1% to Rs 552.3 crore as the company added new restaurants.

In the quarter, the company added 18 Domino’s outlets and closed eight, taking the total store count to 1,117. It closed 13 Dunkin’ outlets and added three to bring down the total store count to 63.

“Higher depreciation related to network expansion also impacted profit after tax. Earnings reflect the impact of exceptional items of Rs 12.17 crore related to one-time separation cost incurred as part of manpower rationalization exercise carried out by the company during the quarter,” Jubilant FoodWorks said in its statement.

For the full year ended 31 March 2017, the company’s profit declined by 36.9% to Rs 67.25 crore from Rs 106.62 crore in the previous year. Operating revenue for the full year increased by 5.6% to Rs 2,546.07 crore from Rs 2,410.21 crore in the previous year.

“FY17 was a year which tested our mettle and posed unprecedented challenges. As a result, our topline growth was adversely impacted in the quarter and the year. However, the company took immediate steps to cut costs and improve efficiencies which enabled us to minimize the adverse impact of slowing sales on the bottom line. We believe that the short-term headwinds are now behind us and firmly believe in the long-term growth potential of our business,” Shyam S. Bhartia, chairman and Hari S. Bhartia, co-chairman, Jubilant FoodWorks, said in the statement.

Pratik Pota, CEO and whole-time director of Jubilant FoodWorks, said the company had taken “concerted action” to get back to profitable growth. “We intensified our cost optimization drive across all functions in the organization. In addition, we also sharpened our strategy to get growth back in the business. The key pillars of our strategy – which in many ways is about getting back to basics – will be delivering improved product quality, introducing powerful consumer-relevant innovations, improving our value for money offering, and upgrading our digital and technology interface,” Pota added.

The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks are closely related. There are, however, no promoter cross-holdings.

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