The Market Monitor Minding the Nation's Business
Listed Philippine Seven Corp. (PSC), the operator of 7-Eleven retail stores, reported a net income of P1.01 billion in 2015, a 15.4-percent rise from a year ago, and attributed to growth in sales of all corporate and franchise-operated stores by 25.3 percent to P25.8 billion from P20.6 billion in 2014.
For the fourth quarter, net income increased by 21.6 percent to P492.5 million, from P405.0 million during same period in 2014. Rate of earnings growth was slower and can be attributed to the company’s expansion program, including logistics infrastructure in the growth areas of the Visayas and Mindanao.
“This will impact profitability in the medium term, in the form of underutilized warehouses, but is expected to benefit the company by achieving dominant position in new markets,” the company reported.
Earnings before income tax, depreciation and amortization (Ebitda) stood at P2.58 billion in 2015, from P2.13 billion in 2014—a 21.2 percent increase. Earnings per share (EPS) grew by 15.2 percent to P2.20 from P1.91 in the same period. Net margin decreased from 5.1 percent in 2014 to 4.5 percent in 2015.
PSC ended 2015 with 1,602 stores all over the country, up by 25 percent from the previous year. The company achieved another milestone by entering Mindanao as it opened stores in Davao and Cagayan de Oro cities in the second quarter.
At the end of 2015, there were 1,391 7-Eleven stores in Luzon, 178 in the Visayas and 33 in Mindanao.
PSC President and CEO Jose Victor Paterno said: “The rest of the country is relatively uncontested in comparison. We are virtually the only competitor with the critical mass to build out proper supply chains in areas logistically unreachable from the greater Manila area. Such supply chains come at a medium term cost in terms of underutilized warehouses.”
“We expanded our existing distribution centers and opened new warehouses in 2015. We ended the year with nine warehouse facilities, (throughout Luzon, Mindanao, and three islands in the Visayas), against four in mid-2014,” he added.
“We wager that first movers, especially on islands that cannot sustain more than one or two warehouses, will be rewarded with an unusually dominant share (at 90 stores, we have an over 80-percent share in Cebu), and that BPO (business-process outsourcing) trends will continue to drive growth in the remote urban areas of Luzon and the islands,” he said.
For this year, the company aims to increase its capital expenditures to P3.5 billion to support its accelerated store expansion strategy.
“Bulk of the said amount is allocated to new store opening, store renovation and equipment acquisition,” Paterno said.
PSC acquired from Southland Corp. (now Seven Eleven Inc.) in Dallas, Texas, the license to operate 7-Eleven stores in the Philippines in December 1982 and was listed in the Philippine Stock Exchange on Feb. 4, 1998. RIZA LOZADA