Sapphire Foods on Thursday recorded its fiscal second quarter profit at Rs 15.34 crore, down 43 per cent as against Rs 26.89 crore during the corresponding quarter of FY23. It posted revenue from operations at Rs 642.64 crore, up 14.2 per cent in comparison to Rs 562.77 crore during the same period last year, led by strong KFC performance. The company EBITDA stood at Rs 115 crore, up 11.5 per cent on-year.
The company said that its Q2FY24 consolidated restaurant sales of Rs 641.40 crore grew by 14 per cent and EBITDA growth was despite the continuing demand headwinds further exacerbated by an additional month of vegetarian days. While raw material inflation has remained stable QoQ, gross margin has seen significant improvement YoY.
Sapphire Foods said that it added 36 restaurants during Q2FY24 which included 23 KFC outlets, 9 Pizza Hut in India and 4 Pizza Hut in Sri Lanka, taking the total restaurant count to 814.
During the second quarter of FY24, KFC delivered a strong restaurant EBITDA of 19.2 per cent (130 bps YoY). The overall restaurant sales, it said, grew on-year by 19 per cent (flat SSSG), despite a soft quarter for KFC given the higher incidence of vegetarian days (with an additional month of Shravan this year). The improved profitability was on account of gross margin recovery of 230 bps YoY and tighter controls over cost.
Further, Pizza Hut Overall Restaurant sales declined by 6 per cent and SSSG declined by 20 per cent as compared to 23 per cent during Q2FY23 as a result of the tough macro conditions and specifically high competitive intensity in the Pizza category. Further, it said that the operating deleverage arising out of negative SSSG impacted Restaurant EBITDA, which came at 7.6 per ceny (750 bps YoY).
“Despite the recent period being challenging, Pizza Hut continues to remain an important pillar of Sapphire Foods’ multi brand restaurant operator strategy. In the immediate term we will be cautious with our restaurant expansion plans while continuing to work on improving brand salience and product innovation. This along with our omni-channel execution focus gives us the confidence that the brand will emerge stronger in the medium term,” the company said in a statement.
Meanwhile, Sapphire Foods said that its Sri Lanka business is showing green shoots of macro economic recovery – single digit inflation, forex stability, ease of availability of input raw materials. “Our overall restaurant sales grew by 8 per cent in LKR ( 29 per cent in Rs terms) while SSSG was 1 per cent. Restaurant EBITDA margins were at 15.3 per cent (30 bps YoY), the highest in the last 5 quarters. We remain confident of the growth opportunity in Sri Lanka, given the pre-eminence of the Pizza Hut brand in the QSR category,” it said.