Philippine Seven Net Income Up 10% in 1H 2015

Mandaluyong—(PHStocks)—Philippine Seven Corp. (PSE: SEVN), the local licensee of 7-Eleven Convenience Stores, registered a 10.1% growth in net income at the end of the first half.

The improved financial performance was largely driven by the increase in sales of all corporate and franchise-operated stores, which posted growth of 24.3% to PhP12.2 billion.

PSC ended the first half of 2015 with a total of 1,405 stores all over the country, up by 25.3% compared with same period last year. The Company achieved another milestone during the second quarter by opening four 7-Eleven stores in Davao City and Cagayan de Oro and two stores in Boracay.

Jose Victor Paterno, President and CEO, said in his annual report to shareholders, “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 GMA. Such supply chains come at a medium term cost in terms of underutilized warehouses, and 2015 will be our nadir: we will be operating 10 warehouses by year-end (throughout Luzon, Mindanao, and three islands in the Visayas), versus four in mid 2014.

“To put such costs in perspective, operators in contiguous territories typically serve 1,000 stores per DC (though we have downscaled and adapted our model to be cost effective for smaller areas). We wager that first movers, especially on islands that cannot sustain more than one or two warehouses, will be rewarded with unusually dominant share (at 90 stores, we have over 80% share in Cebu), and that BPO trends will continue to drive growth in the remote urban areas of Luzon and the islands.”

For this year, the company will be increasing its capital expenditures budget by more than 50% to PhP3 billion to support its accelerated store expansion strategy. Bulk of the said amount is allocated to new store opening, store renovation and warehouse expansion.