Net income at the end of the first six months of the year rose by 10.1% to P356.5 million from P323.9 million during same period in 2014.
- Retail sales of all stores during the six-month period went up by 24.3% to P12.2 billion from P9.8 billion compared with the preceding year.
- Store count grew by 25.3% to 1,405 stores, with franchised stores accounting for 61% of the total.
- Rate of earnings growth was slower and can be attributed to the Company’s capacity building expenditures. PSC has been expanding its logistics infrastructure to support its unprecedented expansion in Visayas and Mindanao.
- This will impact profitability in the medium term, in the form of underutilized warehouses, but is expected to benefit the Company by achieving dominant position in new markets.
The following are the financial highlights as based from the Company’s financial reports:
(Amount in Php millions except store count and EPS)
|For the 2nd Quarter Ended
|For the Six Months Ended
|Revenue from merchandise sales||5,586.7||4,375.0||27.7||10,129.3||7,986.4||26.8|
|Net margin (% of revenue from merchandise sales)||4.4%||5.1%||3.5%||4.1%|
|EBITDA (% of revenue from merchandise sales)||11.1%||12.1%||10.2%||10.9%|
Philippine Seven Corporation (PSC), the local licensee of 7-Eleven Convenience Stores, registered a 10.1% growth in net income at the end of the first half.
The improved financial performance was largely driven by the increase in sales of all corporate and franchise-operated stores, which posted growth of 24.3% to P12.2 billion.
PSC ended the first half of 2015 with a total of 1,405 stores all over the country, up by 25.3% compared with same period last year. The Company achieved another milestone during the second quarter by opening four 7-Eleven stores in Davao City and Cagayan de Oro and two stores in Boracay.
Jose Victor Paterno, President and CEO, stated in his annual report to shareholders that, “the rest of the country is relatively uncontested in comparison. We are virtually the only competitor with the critical mass to build out proper supply chains in areas logistically unreachable from GMA. Such supply chains come at a medium term cost in terms of underutilized warehouses, and 2015 will be our nadir: we will be operating ten warehouses by yearend (throughout Luzon, Mindanao, and 3 islands in the Visayas), vs four in mid 2014. To put such costs in perspective, operators in contiguous territories typically serve 1000 stores per DC (though we have downscaled and adapted our model to be cost effective for smaller areas). We wager that first movers, especially on islands that cannot sustain more than one or two warehouses, will be rewarded with unusually dominant share (at 90 stores, we have over 80% share in Cebu), and that BPO trends will continue to drive growth in the remote urban areas of Luzon and the islands.”
For this year, the Company will be increasing its capital expenditures budget by more than fifty percent to P3.0 billion to support its accelerated store expansion strategy. Bulk of the said amount is allocated to new store opening, store renovation and warehouse expansion.
Philippine Seven Corporation (PSE:SEVN) operates the largest convenience store network in the country. It acquired from Southland Corporation (now Seven Eleven Inc.) of Dallas, Texas the license to operate 7-Eleven stores in the Philippines in December 1982. It was listed in the Philippine Stock Exchange on February 4, 1998.