McDonalds operator records €92.4 million gross profit in 2021

Premier Capital p.l.c., operator of McDonalds restaurants in Malta and five other countries, registered €92.4 million in gross profit in 2021, up from €65.9m in FY20, the company’s financial analysis for 2022 shows.

This year, the Group is projecting gross profit to fall within the region of €106.4m, reflecting an overall improvement of about 15.1% on a comparable basis.

Premier Capital is engaged in the operations of McDonald’s restaurants in Estonia, Greece, Latvia, Lithuania, Malta and Romania.

Group revenue in 2021 rose to  €405.4m, up from €319.0m in 2020, predominantly driven by both an increase in revenue per store together with a net increase in the number of stores which from 146 stores in the beginning of FY19 increased to 166 as at year end FY21.

All operating markets within the Group experienced significant improvement following the business disruption caused in 2020 by the onset of COVID-19. 

The region reporting the highest improvement during FY21 was Greece, which registered a relative increase of 38%. Romania reported an increase in revenue of 30%, while the Baltic Countries and Malta each registered a 19% increment.

The Group anticipates to generate €502.8m in revenues during FY22, an increase of 24% over 2021.

Portfolio

In 2021, the Group continued to grow its portfolio, increasing the total number of restaurants to 166, up from 159 in 2020. Of these restaurants, 92 are operated in Romania, 40 in the Baltic Countries (collectively, Estonia, Latvia and Lithuania), 25 in Greece, and nine in Malta. 

Premier Capital plans to invest over €28m in its restaurant footprint during the course of 2022. 50% of this is earmarked for new restaurant openings, with the rest targeted to restaurant capital expenditure and digital upgrades. 

The largest extent of investment is targeted at Romania and Greece (50% and 23% respectively). Investment in the Baltic countries and Malta will account to the residual 20% and 7%, respectively. All of the investment strategy is planned to be funded without any additional leverage.

Over the last three financial years, the Group has invested a total of €31.6m on new stores and spent €2.5m on the remodelling of old stores. The Group has also spent a total of approximately €19.9m on capital expenditure relating to the maintenance of existing stores from FY19 to FY21.

Routine maintenance and remodelling capital expenditure averaged €46.6k per store in 2021, and represents an average of 2.1% of sales. 

The Group opened eight new restaurants during FY21; five in Romania, one in Lithuania and two in Greece. During the same year, the Group also closed one store in Greece. A further 16 existing restaurants were upgraded to accommodate McDonald’s newest service and digital platforms, allowing for the roll out of table service and self-ordering kiosks. By the end of 2021, a total of 156 restaurants had deployed McDelivery. 

In 2022, Premier Capital plans to open 10 additional stores, bringing the total number to 175, with a planned total capital expenditure of €14m expected to be incurred on these new stores in the same year with a capital expenditure per new store projected to average circa €1.4m.

Profit and costs

The Group’s gross profit improved to €92.4m in FY21 from €65.9m in FY20, with this resulting into an improved gross profit margin of 22.8% (FY20: 21.2%). 

In 2022, Premier Capital is projecting gross profit to amount within the region of €106.4m, reflecting an overall improvement of circa 15.1% on a comparable basis. 

Operating expenditure represents costs directly related to the business activity of each store, apart from raw materials. It mainly includes staff costs, advertising, utilities and other administrative expenses. 

The Group’s total net operating expenditure rose to €336.5m in 2021, up from €267.4m in FY20. 

This is expected to increase to €429.7m in FY22, reflecting the overall increase in revenue which is expected to be generated by the Group throughout the year. 

In line with previous expectations, net finance costs tapered down to €5.9m during FY21, with these expected to amount higher to €6.8m during FY22, predominantly as a lower level of finance income will be received on intercompany loans now repaid.

Taking all these factors into consideration, Premier Capital reported a net profit after tax figure of €34.3m for FY21, up from €17.7m in 2020. 

For 2022, the Group is projecting a net profit of €35.4m.

Cash flow

With the positive financial performance registered by the Group during FY21, cash flow from operations improved to €65.4m from €38.7m in 2020. 

Cash flow from operating activities are projected to amount to €63.1m in FY22. 

In 2021, cash flow used in investing activities during FY21 amounted to €32.6m, with this being higher in comparison to previous expectations. 

And although the Group still plans to invest in the opening of the new stores during FY22, cash flows used in investing activities are expected to fall to €19.3m.