Business Forum • 30 August, 2024 at 10:45 AM
Sphera Franchise Group, the largest group in the food service industry in Romania, continued to improve its performance. The first half of 2024 was the best first semester in its history in terms of sales, EBITDA, and net profit. Compared to the same period last year, the Group saw a 6.4% increase in sales (reaching RON 740 million) and more than doubled its net profit. Sphera Group also achieved double-digit increases in restaurant operating profit and EBITDA.
"In the first half of the year, we achieved very good financial results despite the less than favorable market conditions, including higher-than-expected inflation and cautious consumer behavior. Our performance once again demonstrates the strength of our strategy and the power of the brands in our portfolio, all supported by an exceptional team, whom I thank for our success today. As we look to the future, we remain confident that our solid strategy, strong team, and 30 years of experience will continue to deliver results,” said Călin Ionescu, CEO at Sphera Franchise Group.
The Romanian market was the main contributor to the Group's performance in H1 2024, generating sales of RON 639.5 million, which accounted for more than 86% of the total sales. KFC Romania is the most valuable asset in Sphera's portfolio, with restaurant sales reaching RON 544 million, up by 8.6% year-on-year.
Profitability also significantly improved, with EBITDA showing a strong upward trend, rising to RON 78.9 million in the first half of 2024, up 50.7% yoy. This was mainly driven by the performance of KFC Romania, which saw a 50.7% increase year-on-year, reaching RON 70.3 million in EBITDA. Additionally, KFC Moldova also experienced a double-digit increase (+57.3%), while Taco Bell more than doubled its EBITDA (+110.2%).
This improvement was mainly due to effective cost-control measures implemented throughout the Group. As a result, the share of restaurant expenses in total sales decreased by 3 percentage points. All brands saw double-digit increases in restaurant operating profit, except for Pizza Hut.
The EBITDA margin achievement is very good at 10.7% for Sphera Group, and it varies by brand. KFC Moldova has the highest figure at an excellent 22.4%, followed by KFC Romania at 12.9%. Taco Bell, the youngest brand in Sphera's portfolio, has continued to improve its margin, which reached 7.8% in the first half of the year.
The Group's net profit in H1 soared by 109.4% compared to the same period in 2023, reaching RON 40.7 million. This doubling in profitability was fueled by operational expansion and continued efficiency measures. KFC Romania was the main driver of this result, earning a profit of RON 45.9 million, up 74.4% compared to the same period last year. KFC Moldova also saw a great improvement in net profit, of 68.3%, to RON 1.9 million, while Taco Bell registered its first profitable half of the year. Pizza Hut made progress in reorganization process, reducing its net losses to RON 5.7 million, 6% lower than in H1 2023.
The performance in the first semester is due to both network expansion and same store sales growth. The Group opened 7 new KFC restaurants between June 30, 2023 and June 30, 2024, all in Romania, while two additional openings took place in July 2024. The net debt to EBITDA ratio remains at a reduced level of 0.4.
Improved performance in Q2 2024
Q2 continued Sphera Group's strike of records, being the best second quarter of the year in history in terms of sales, EBITDA and net profit. Total sales stood at RON 374.1 million, supported by growth across all three markets. This expansion continues to shape a promising year, with the company having a successful track record of increasing sales quarter by quarter, with the last three months of the year often delivering the strongest results. For 2024, this trend is expected to persist.
"The results we have achieved during this period reflect our determination to deliver on our promise to all stakeholders. We have streamlined the activity, continuing the wise cost control management, implementing network optimization and capitalizing on efficiencies. These efforts have enabled us to strengthen our market position and increase profitability while maintaining a healthy balance between investment and operating costs. The increase in share value is a clear testament to the confidence and support we enjoy from our investor community for our actions, and we remain committed to continuing on this successful path", said Valentin Budes, CFO at Sphera Franchise Group.
In Q2 2024, EBITDA followed a positive evolution, reaching RON 39.1 million, a 35.7% increase YoY, while the net profit of the Group recorded a remarkable increase of 59.1% YoY, to RON 19.2 million. All brands, except for Pizza Hut, ended Q2 with a net positive result.
Positive capital market evolution and supplementary dividend in 2024
SFG's share price was on a strong upward trend in H1 2024, recording an appreciation of 47.1%, while the BET index gained 18.7%. The Total Return on SFG shares in H1 2024, including the dividend paid on June 6, was 51.2%, versus 25.2% increase for the BET-TR index registered in the same period.
To create the best trading conditions for the company's shareholders, and to sustain the liquidity of the shares, Sphera Group has signed, during this period, a partnership for a second market maker.
Also, to reward the shareholders' confidence in the company, Sphera intends to have a new dividend distribution this year and a General Shareholder's Meeting was convened for October 7 to vote upon this issue. The Board of Directors proposes the distribution of a gross dividend per share of RON 1.05, from 2023 undistributed profits.