Sapphire Foods India (SAPPHIRE) Q4 20/21 earnings summary

Executive summary

• FY21 was heavily affected by COVID-19 closures and restricted operating hours; consolidated revenue fell 24% YoY to Rs 10,196.19 million, while H2 profitability improved as sales recovered and cost controls took effect.

• Delivery sales contribution rose to 41.9% from 23.9% in FY20, supporting recovery while dine-in operations faced restrictions.

Financial highlights

• Consolidated revenue from operations was Rs 10,196.19 million, down from Rs 13,404.12 million in FY20; reported net loss was Rs 998.97 million versus Rs 1,592.46 million.

• Adjusted EBITDA was Rs 381.82 million; EBITDA including Ind AS 116 was Rs 1,787.40 million. Loss before tax, excluding exceptional items and without Ind AS 116, was Rs 827.66 million.

• FY21 consolidated loss before exceptional items and tax was Rs 986.94 million; exceptional items were nil, versus Rs 943.91 million in FY20, primarily goodwill impairment and obsolete inventory provisions.

• Consolidated operating cash flow was Rs 1,540.74 million; investing cash outflow was Rs 779.24 million and financing cash outflow was Rs 515.28 million.

Outlook and guidance

• New-store expansion accelerated toward Q4 FY21 as sales returned to pre-COVID levels; plans called for the highest annual opening pace across KFC and Pizza Hut in CY2021.

• LS Retail POS rollout was expected to reach all stores by H1 FY22, improving customer ordering and payment and strengthening sales, cash and inventory controls.

• Yum development targets for Pizza Hut and KFC were revised under COVID recovery relief agreements; management considered achievement of the revised targets highly probable.