Westlife Foodworld (505533) Q4 16/17 earnings summary

Executive summary

• FY17 revenue rose 11.7% to Rs 9,307.9m; same-store sales grew 4.0%, gross margin reached 60.7%, and cash profit rose 27.9% to Rs 559.9m.

• Customer-experience investments through Experience of the Future (EOTF) and cost discipline under ROP 2.0 supported sales and cash generation amid demonetisation, sector weakness and rising competition.

Financial highlights

• Revenue from operations was Rs 9,307.9m versus Rs 8,334.3m in FY16; comparable sales growth improved to 4.0% from 1.8%.

• Gross margin increased ~70 bps YoY to 60.7%; restaurant operating margin was Rs 1,022.2m, while its margin rate declined to 11.0% from 11.9%.

• Operating EBITDA was Rs 495.0m versus Rs 487.7m; margin was 5.3% versus 5.9%. Net loss was Rs 121.2m versus prior-year profit of Rs 28.3m; EPS was -Rs 0.78 versus Rs 0.18.

• Cash profit increased to Rs 559.9m from Rs 437.8m; operating cash flow was Rs 656.7m versus Rs 798.7m.

Outlook and guidance

• Targeting 450–500 restaurants across western and southern India by 2022; 65–70% of growth is expected from key cities.

• FY18 plan: expand McCafé from 111 locations to 140–150; management also planned 25–30% growth in McCafé outlets.

• Medium-term margin expansion expected from new-store scale, ROP 2.0 efficiencies, brand extensions and continued people investment.