Jollibee calls off preferred share sale on ‘strong’ cash flow
Jollibee Foods Corp. (JFC) has canceled plans to raise P8 billion from the issuance of preferred shares due to “strong profit performance and cash flow generation.”
Richard Shin, chief financial officer at the homegrown company founded by tycoon Tony Tan Caktiong, in a statement said the firm would explore “other capital raising opportunities focused on shareholder value and optimization of our capital structure.”
JFC said it was also cutting by at least 20 percent its P23-billion budget allocated for spending this year.
It hinted, however, it may opt for bank loans later in the year, when the Bangko Sentral ng Pilipinas is anticipated to cut interest rates. Lower rates are more beneficial to borrowers since these mean lower borrowing costs.
“JFC expects these factors and considerations will improve its flexibility in its funding and in increasing its leverage position,” the company said, adding that it also expected to gain more profit once South Korea’s Compose Coffee was fully integrated into JFC.
“Following careful consideration of all relevant factors and in the interest of achieving the best value for our shareholders, we have made the decision to withdraw our previously announced public offering of Series C preferred shares,” Shin said.
JFC was supposed to offer P8 billion worth of preferred shares later this year to fund further growth in the Philippines and refinance series A preferred shares.
JFC’s earnings in the first quarter of the year expanded by 27 percent to P2.62 billion on stronger sales in its domestic and international businesses.
Shin previously said JFC was “slightly ahead” of its targets and was thus poised to achieve a 10-percent to 14-percent in full-year systemwide sales growth.
Revenues during the quarter jumped by 11.3 percent to P61.3 billion, while sales expanded by a tenth to P86.8 billion.
Domestic systemwide sales grew by 6.9 percent, while the international business inched up by 3.2 percent.
The maker of the iconic Chickenjoy has also been intensifying its foray into the highly competitive coffee and tea space mainly through substantial acquisitions of brands such as Compose Coffee.
