Westlife Foodworld (505533) Q4 13/14 earnings summary

Executive summary

• FY14 total revenue rose 8.2% to ₹7,403.1m, driven by 29 new restaurants; comparable sales fell 6.4% amid weak consumer sentiment.

• Restaurant count reached 184 across western and southern India; over 40% of outlets were less than three years old.

• Priorities were expanding access, growing baseline sales, improving margins and investing in people; more than 7,500 employees were on staff at year-end.

Financial highlights

• Consolidated revenue was ₹7,403.1m versus ₹6,842.7m in FY13; sales were ₹7,319.0m versus ₹6,756.3m.

• Operating EBITDA was ₹531.6m versus ₹655.1m; operating EBITDA margin declined to 7.2% from 9.6%.

• Consolidated profit after tax was ₹9.5m; cash profit was ₹487.6m, versus ₹332.5m and ₹655.4m, respectively, in FY13.

• Gross margin improved 195 bps YoY through supply-chain and menu-mix efficiencies; restaurant operating margin fell to 12.5% from 14.2%.

• Adjusted for ₹43.7m of extraordinary expenses, including scheme-related costs and restaurant asset write-offs, reported results reflected a significant one-time expense.

Outlook and guidance

• Plan to add 175–250 restaurants across western and southern India over five years; a separate longer-term ambition targets 800+ restaurants.

• Target of approximately 250 restaurants by 2015; near-term margins expected to remain subdued as new outlets and people investments weigh on results.

• Plans include 75–150 McCafés over three to five years, with continued focus on everyday value, loyalty, Drive-Thru, cost optimization and operating leverage.

• Menu changes and introductions to focus on customer attraction and margin improvement over a three-year perspective.