Sphera Franchise Group (SFG) Q4 2024 earnings summary

Executive summary

• Achieved record consolidated sales in 2024, surpassing RON 1.5 billion for the first time, with 5.4% year-over-year growth despite a challenging macroeconomic and political environment.

• Net profit increased 35% year-over-year to RON 97.2 million, with normalized net profit up 22%.

• Opened seven new restaurants, expanded KFC, Taco Bell, and entered Moldova; added Cioccolatitaliani franchise, with first Italian unit planned for H1 2025 and further expansion in Italy and potentially Romania.

• SFG shares delivered a 65% total return in 2024, outperforming the BET index, with trading liquidity nearly tripling after adding a second market maker.

• Maintained a focus on cost management, operational efficiency, and supply chain optimization to balance competitive pricing and margin protection.

Financial highlights

• Restaurant sales reached RON 1,548.4 million in 2024, up 5.4% year-over-year; Q4 sales hit RON 404.9 million, up 2.7% year-over-year.

• Normalized EBITDA rose 19.6% year-over-year to RON 176.9 million; normalized operating profit up 24.7% to RON 130.4 million.

• Restaurant operating profit rose 22% year-over-year, mainly due to KFC Romania and improved Pizza Hut results.

• Q4 2024 saw a 10.5% year-over-year decrease in restaurant operating profit and a 28.7% drop in net profit due to higher payroll and tax costs.

• Net debt-to-EBITDA ratio reached a historic low of 0.25 at year-end.

Outlook and guidance

• Plans to open five new KFCs in Romania, one to two Taco Bells in Romania, three to four Cioccolatitaliani in Italy, and one to two KFCs in Italy in 2025, with ~4 Cioccolatitaliani units per year in Italy over five years and possible expansion to Romania.

• Cautious but optimistic approach for 2025, focusing on high-return formats, operational efficiency, and continued cost control.

• Pricing policy remains flexible, with increases considered only after thorough analysis and as a last resort to protect margins.