Sphera Franchise Group (SFG) Q1 2025 earnings summary

Executive summary

• Q1 2025 consolidated sales declined 0.9% year-over-year to RON 362.6 million, reflecting subdued consumer demand, reduced discretionary spending, inflationary pressures, and a strong prior-year base.

• Net profit dropped 63.6% year-over-year to RON 7.8 million, mainly due to higher payroll and operating expenses, mandatory wage adjustments, and inelastic G&A costs.

• Restaurant expenses rose 4.3% year-over-year, with payroll and employee benefits up 12.4% to RON 92.7 million.

• KFC Romania was most affected, while Taco Bell performed strongly, highlighting the benefits of portfolio diversification.

• The economic outlook remains uncertain due to political instability, potential fiscal reforms, and external pressures.

Financial highlights

• Restaurant sales reached RON 362.6 million, down 0.9% year-over-year; Romania sales fell 1.9% to RON 311 million.

• Restaurant expenses rose 4.3% to RON 336 million, with payroll and employee benefits up 12.4% to RON 92.7 million.

• Net profit dropped to RON 7.81 million from RON 21.45 million in Q1 2024.

• EBITDA (excluding IFRS 16) was RON 24.8 million, down 37.5% year-over-year; EBITDA margin decreased by 4 percentage points.

• Restaurant operating profit decreased 36% year-over-year to RON 28.6 million.

Outlook and guidance

• 2025 budget projects total sales of RON 1,738.2 million (+12.1% YoY), EBITDA of RON 194.3 million (+9.8%), and net profit of RON 105.2 million (+8.2%).

• Growth expected from same-store gains and up to 13 new restaurant openings across brands and geographies, including 4 KFC and 1 Taco Bell in Romania, 1 KFC in Moldova, 3 KFC and 4 Cioccolatitaliani in Italy.

• Budget assumes a normal macro environment and 5% average inflation.

• Management remains ready to update guidance if major fiscal or economic changes occur.

• Cost management and digitalization remain key focus areas.