7-Eleven Philippines

Annual Stockholders’ Meeting Highlights

MANILA, Philippines (July 30, 2015) — Philippine Seven Corporation (PSC), the local licensee for 7-Eleven Convenience Stores, is confident it will maintain its leadership position in the convenience store sector as it expands presence while taking advantage of an improving Philippine economy.

Jose Pardo, PSC Chairman, announced Thursday the continuation of company plans to expand 7-Eleven stores all over the country as the company takes advantage of its first-mover advantage and a large store-network’s economies of scale. The company closed 2014 with 1,282 stores, an increase of 273 stores from end-2013’s 1,009.

“We opened the most number of new stores in our history in 2014. If you recall, it took us 12 years to open the first 100 stores in the Philippines, and another 14 years to reach the 500th store milestone by 2010. In contrast, PSC opened another 500 stores in a span of only 3 years, enabling us to surpass the 1,000th-store milestone in 2013,” said Mr. Pardo during the company’s stockholders meeting Thursday .

“PSC plans to further accelerate the rate of new store openings, to take advantage of improving economic conditions and to protect our market share in light of increased competition. We believe that this sector will remain crowded, and we intend to capitalize on our first-mover advantage and economies of scale, to maintain our dominant position in the market,” he added.

Mr. Pardo said PSC is taking steps to protect market leadership, “recognizing that rewards for market share are specially strong in the convenience store sector.”

“This involves not only an increased pace of expansion in areas contested by competition, but strategic entry into new territories. It may not be profitable for the first few years due to the high fixed costs of logistics, but the company will later be rewarded,” said Mr. Pardo.

PSC ventured into Visayas in 2012 with the opening of 7-Eleven stores in Cebu, followed by Negros in 2013, and last year established 7-Eleven presence in the Panay region. This year, PSC further went down south and set up four 7-Eleven stores in Davao and Cagayan de Oro in Mindanao — another milestone in PSC history. Two stores were also opened in Boracay in the first half of the year.

“In 2014, new operators boosted franchise store count to 811 franchisees, from 690 a year ago. As a result, total franchise revenues went up by 20.5 percent, to P1.6 billion,” said Mr. Pardo.

“Marketing income continued to enhance our bottom-line, generating Php463.4 million as we expanded brand-building opportunities for vendor partners,” he added.

Jose Victor Paterno, PSC President and CEO, expressed confidence on the company’s push into the greater part of the country, noting how these markets remain untapped.

“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 base: we will be operating ten warehouses by yearend (throughout Luzon, Mindanao, and 3 islands in the Visayas), versus four in mid-2014,” he said.

PSC closed 2014 with a net income of P873.3 million, up 27.9 percent from P682.6 million in 2013. This translates into and earnings per share of P1.91, higher than the prior year’s P1.49.

Consolidated revenues reached P17.1 billion, up 21.27 percent from 2013’s P14.13 billion. System-wide sales reached P20.6 billion, an increase of 17.3 percent.

On Monday, PSC reported that it generated profit of P356.5 million for the first half of the year, 10.1 percent higher than the previous year’s P323.9 million. Although the rate of earnings growth was lower than the previous year, it is attributed to the Company’s capacity building expenditures since PSC has been expanding its logistics infrastructure to support its unprecedented expansion in Visayas and Mindanao.

Lastly, PSC’s consolidated revenues reached P10.13 billion up 26.8 percent from the prior year’s P7.99 billion, with system-wide sales at P12.15 billion, 24.3 percent higher.