Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sphera Franchise Group SA (BSE:SFG, Financial) achieved record sales in 2024, surpassing the RON1.5 billion threshold for the first time.
- EBITDA increased by almost 20% in normalized terms, reflecting strong financial performance.
- The company expanded its portfolio by adding the Cioccolatitaliani brand, broadening its customer base and strengthening its position in the Italian market.
- KFC Romania continues to be a high performer, generating over two-thirds of the total group turnover with a healthy EBITDA margin.
- Taco Bell showed impressive growth, with normalized EBITDA jumping by almost 60% and net profit growing sixfold.
Negative Points
- The political and economic climate in 2024, including elections and inflation, created uncertainty and challenges for the company.
- Restaurant expenses rose by 5.3% year-on-year in Q4 2024, largely due to higher payroll costs.
- The effective tax rate increased in Q4 2024 due to changes in taxation, impacting net profit.
- Pizza Hut sales faced a mild contraction due to store closures, although there was some improvement by Q4.
- The geopolitical context remains fragile, posing potential risks for 2025.
Q & A Highlights
Q: How do you see same-store sales in the coming quarters? Can you increase pricing volumes, etc.?
A: Calin Ionescu, CEO, stated that they plan to open additional KFC and Taco Bell restaurants in Romania and Cioccolatitaliani in Italy. The delivery sales currently make up 18% of total sales, and there is a trend towards a decrease in delivery sales in the coming years.
Q: Is there room to optimize costs further?
A: Valentin Budes, CFO, emphasized that cost optimization is a continuous focus for the company. They have internal targets to achieve cost efficiencies and expect to see benefits in 2025, particularly in labor and goods costs.
Q: Can you elaborate on the changes in taxation that drove the effective tax rate increase in Q4 2024?
A: Valentin Budes explained that the switch from a 1% micro income tax to a 16% normal income tax in Romania for KFC significantly impacted the tax rate. Additionally, deferred tax calculations in Italy contributed to the variance.
Q: Can we expect Pizza Hut to turn profitable on the net income level in Q1 2025?
A: Valentin Budes mentioned that the goal for 2025 is to break even from an operational perspective (EBITDA), which is a prerequisite for future profitability.
Q: Could you please discuss CapEx per newly opened restaurant?
A: Valentin Budes noted that CapEx depends on the restaurant format. For drive-thru locations, the investment is approximately EUR 1.1 million per restaurant, while for Cioccolatitaliani in Italy, it is around EUR 0.5 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
