Its normalized EBITDA reached RON30.7 million in the first half of 2021, from RON1.5 million in the year-earlier period. For the six-month period ended June 30, 2021 and June 30, 2020, respectively, EBITDA was normalized to exclude the accrued penalties due to Pizza Hut Europe (Master Franchisor – YUM!) for the restaurants committed to be opened in 2019 and postponed for the future periods.
”After a long period of instability caused by the novel coronavirus pandemic, Sphera Franchise Group closed Q2 2021 with record-high results and the best second quarter in the company’s history, registering RON 233.1 million in consolidated sales on all three markets of activity, a surge of 119% compared to the same period of last year. Despite ongoing lockdowns and limitations on the indoor dining, KFC stores present in Romania, Italy and Republic of Moldova as well as Taco Bell in Romania thrived between April and June 2021, registering the best sales for that period of the year. Combined with a strong first quarter of the year, Sphera Franchise Group closed H1 2021 with consolidated sales of RON 444.5 million, a 46% increase compared with H1 2020, normalized EBITDA of RON 30.7 million (+1,867%) and a net profit of RON 5.2 million (+123%),” the company said in its financial report.
The report also shows that in the first six months of 2021, restaurant expenses grew at a slower pace than the topline, reaching RON408.7 million, a 37% increase compared to H1 2020. Food and material costs grew by 42%, reaching RON143.5 million; the increase that was primarily volume driven. Moreover, the Group registered a 43% increase in payroll and employee benefits, mainly due to the uptake in store activity in Q2 2021 as compared to Q2 2020 and limited state aid measures. Rent costs registered a tempered increase of 16%, reaching RON34 million as the Group continued renegotiations in Italy, Republic of Moldova as well as for Pizza Hut locations in Romania. Royalties, directly related to the topline, grew 48% reaching RON26.5 million while advertising increased by 39%, up to RON20.1 million. Depreciation and amortization, reaching RON18 million was in line with H1 2020. Other operating expenses increased by 39%, reaching RON64.4 million, driven by a 63% increase in third-party expenses (mainly due to increase in aggregators volume, resulting in a 148% cost increase YOY, representing 58% of third-party expenses in H1 2021, a 20pp increase compared to a share of 38% registered in H1 2020), 50% increase in maintenance and repairs and 14% increase in utilities costs.
In the first six months of 2021, the restaurants of the Group registered operating profit of RON35.8 million, a 437% increase compared to the same period of last year. The G&A expenses grew slightly in this period, by 4%, reaching RON25.4 million. Consequently, the Group recorded a 159% increase in operating profit, reaching RON10.4 million. EBITDA grew a staggering 3,785% to RON30 million, with EBITDA margin increasing with more than 6pp, reaching 7%. Normalized EBITDA reached RON30.7 million, with normalized EBITDA margin of 7%. Finance costs increased by 22% (mainly due to postponement of principal repayment for bank loans), therefore the Group posted gross profit of RON6.9 million (+134% YOY). The Group closed H1 2021 with a net profit of RON5.2 million, a 123% increase compared to H1 2020.
In January-June 2021, Sphera opened new four restaurants, respectively two KFC restaurants in Romania, in Sfantu Gheorghe and in Braila, one KFC restaurant in Italy – the first Drive Thru unit outside Romania, in the locality of Pomezia, in the province of Lazio, and one Taco Bell restaurant, in Palas Mall in the city of Iasi.
On June 30, 2021, Sphera operated 161 restaurants, of which 140 units in Romania (88 KFC units, 21 Pizza Hut units, 17 Pizza Hut Delivery units and 12 Taco Bell units, one restaurant under the Paul brand and one PHD franchised store), 19 KFC restaurants in Italy and two units in Moldova.
For 2021, the company expects RON1.15 billion in restaurant sales, RON150.5 in restaurant operating profit and normalized EBITDA of RON95 million.
Sphera has a stock market capitalization of RON719 million and its shares have been growing 26% on the stock market since the beginning of 2021, amid deals worth RON56 million.