Westlife Foodworld (505533) Q4 14/15 earnings summary

Executive summary

• FY15 revenue rose 3.2% on 27 restaurant openings, but weak same-store sales and higher occupancy, utility and employee costs drove a consolidated net loss of ₹291.1m.

• Focus remained on local sourcing, restaurant expansion, value offerings and operating efficiencies; gross margin improved ~80 bps YoY.

Financial highlights

• Consolidated revenue from operations ₹7,643.3m, up 3.2% YoY; total revenue ₹7,808.0m vs ₹7,460.1m.

• Consolidated net loss ₹291.1m vs net profit ₹9.5m; basic and diluted EPS both -₹1.87 vs ₹0.07.

• Audited consolidated EBITDA ₹316.3m vs ₹487.9m; finance costs rose to ₹102.2m from ₹46.3m.

• Cash profit ₹253.9m vs ₹487.6m; cash flow from operations ₹187.7m vs ₹380.3m.

• Same-store sales growth was -5.6% vs -6.4%; 27 gross additions brought the restaurant base to 209.

Outlook and guidance

• Plan to add 175–250 restaurants across western and southern India over five years; McCafé target was 50–75 outlets by Dec 2015.

• FY16 priorities: broaden access, expand menu and product platforms, improve gross margins and unit economics, reimage restaurants and invest in people.

• Near-term margins expected to remain subdued as expansion and people investments continue; management expects operating leverage as consumer sentiment and restaurant volumes recover.