Sphera Group surpasses financial benchmark in 2024: recorded sales exceeding 1.5 billion RON and net earnings of 97.2 million RON.
2024: A Monumental Bounce Back for Sphera Group
- Sphera Franchise Group sails through 2024 with RON 1.5 billion in sales, a 5.4% increase, and a net profit of RON 97.2 million, a 22% surge
- KFC Romania and Taco Bell shine, with KFC Romania marking a whopping 15.5% net profit growth and Taco Bell recording a nearly sixfold increase
- Impressive EBITDA margins in Q4 for KFC Romania (13.4%), KFC Moldova (13.7%), and Taco Bell (13%)
Sphera Franchise Group, the flagship food service group of Romania, concluded 2024 on a high note, notching up its best year ever with sales exceeding RON 1.5 billion and a net profit of RON 97.2 million. Sphero's EBITDA margin saw an improvement of 1.4 percentage points over 2023.
"2024 was a year of significant breakthroughs for us. We continued our expansion, bolstered operational efficiency and solidified our presence by opening seven new restaurants, particularly drive-thru outlets," asserted Călin Ionescu, CEO of Sphera Franchise Group. "We ventured into the premium market with Cioccolatitaliani, a new addition to our portfolio." In the face of tense elections, a shaky geopolitical climate, and a less than optimistic country's rating outlook, the team at Sphera Franchise Group saw another year of triumph.
KFC Romania remained the group's financial powerhouse, contributing significantly to the surge in profitability and consolidating the operational results. The expansion of KFC Romania, facilitated by the addition of five new units, had a positive impact on the overall performance and fueled the revenue growth momentum. KFC Romania's net profit soared to over RON 100 million, marking a 15.5% increase compared to 2023, and the EBITDA margin stood at a robust 13.3%.
Taco Bell bolstered its profitability in 2024, clocking in a restaurant operating profit of RON 9.54 million, a staggering 60% increase, and a net profit almost six times higher (+496.3%) compared to the previous year. The EBITDA margin held steady at a commendable 10.5%, demonstrating the network's operational efficiency and long-term potential. The rise in sales, particularly in Q3 and Q4, highlighted Taco Bell's growing popularity, especially among the youth demographic.
KFC Italy continued to turn a profit in 2024, marking the second consecutive year of positive results. Sales reached RON 191.7 million, a commendable 4.3% growth compared to the previous year, a notable achievement for a mature market. Net profit stood at RON 1.1 million.
KFC Moldova's momentum continued throughout 2024, with double-digit growth in critical indicators: sales (RON 23.7 million, +15%), EBITDA (+RON 4.2 million, +13.6%), and net profit (RON 3.1 million, +11.7%). KFC Moldova delivered the highest EBITDA margin in the group, a robust 17.6%.
Pizza Hut's turnaround started showing results, transitioning from an operating loss in 2023 to a restaurant operating profit of nearly RON 1 million in 2024. The reduction in net loss by 30% in 2024 compared to 2023 was driven by increased operational efficiency following the reorganization process, initiated in 2023 and continued into 2024, aimed at eliminating overlaps resulting from the consolidation of Pizza Hut and Pizza Hut Delivery under a single brand.
Record Q4 Sales
The fourth quarter of 2024 was a milestone for Sphera Group, with quarterly sales surpassing the RON 400 million mark for the second time in the group's history (RON 405 million, +2.7% compared to Q4 2023). This upward trend was sustained by a stable consumption environment and the impact of new units opened. All brands saw an increase in Q4 2024 sales compared to Q4 2023, except for Pizza Hut, which experienced a mild dip of 0.5%. KFC Moldova reported a particularly significant increase of 25.9% in Q4 2024 sales compared to the same period last year.
Valentin Budeş, CFO of Sphera Franchise Group, commented on the group's performance: "We exceeded expectations in 2024, demonstrating adaptability to external challenges like industry wage adjustments, inflationary pressures, and cautious consumer behavior fueled by uncertainty in Romanian and Moldovan political contexts. Despite these challenges, we achieved record sales, increased profitability, and demonstrated remarkable improvement in operating margins. The dynamic performance of KFC Romania, outstanding showing of Taco Bell, and promising progress of Pizza Hut indicate our ability to adapt and consistently focus on cost management measures. We are aware that 2025 comes with fresh challenges, but we remain steadfast in our commitment to delivering a solid financial performance for our shareholders."
Comparison to the BET Index
In 2024, Sphera Franchise Group shares experienced a substantial appreciation of 56.8%, significantly outpacing the BET index's 8.78%. The total return on SFG shares in 2024 was a robust 65%, compared to the BET-TR index, which increased by 16.15% in 2024. Sphera Franchise Group shareholders received dividends in two installments in 2024, each worth RON 1.05 gross per share, with the total annual dividend yield reaching 5.6%.
*This is a Press release.
Insights:- Diversified Operations: Sphera's portfolio of brands and geographic locations allowed it to maintain a solid position despite economic instability and market contraction.- Experienced Leadership & Long-Term Strategy: A clear focus on growth and value creation, along with confidence in the leadership team, played a crucial role in managing challenges such as inflation, taxation, and policy uncertainties.- Adaptation to External Economic Conditions: Despite increased payroll expenses due to minimum wage hikes, and cautious consumer behavior, the company maintained relatively stable sales by demonstrating operational resilience in the face of inflation and market shifts.- Cost Management: By containing costs effectively, Sphera was able to sustain profitability, although at reduced margins, in the face of challenges such as increasing expenses.
Sphera Franchise Group continued its focus on investing in business expansion and operational efficiency during the turbulent year of 2024, with a strategic goal of bolstering its presence across markets.
Călin Ionescu, CEO of Sphera Franchise Group, elucidated the group's growth strategy, stating, "We remain committed to our long-term vision and explore new avenues for investment in finance and business that will drive growth and profitability for the group."
Despite a challenging financial landscape, with elections, geopolitical uncertainties, and less than optimistic country ratings, Sphera's finance department successfully navigated these hurdles, driving the group's financial performance and shareholder returns.
Valentin Budeş, CFO of Sphera Franchise Group, emphasized the significance of maintaining a strong financial position during these volatile times, stating, "Our financial strength and adaptability have allowed us to flourish amidst economic instability, ensuring long-term success for the company."
