Westlife Development posts Q4 net loss

The share price of Westlife Development fell 1.74% to Rs 293.05 as its earnings performance failed to cheer investor sentiment.
The company reported a consolidated net loss of Rs 25.27 crore in Q4 March 2020 as against a net profit of Rs 1.28 crore reported in Q4 March 2019.
Consolidated net sales remained almost flat at Rs 332.88 crore in Q4 March 2020 compared with Rs 333.75 crore in the same period last year. The company reported a pre-tax loss of Rs 34.33 crore in Q4 March 2020 as against a pre tax profit of Rs 1.75 crore in Q4 March 2019.

Westlife Development’s QSR business and inventory includes food items are perishable in nature with a short shelf life. Based on the current situation of COVID-19 and continuous lock down, the company expected reduced demand and footfalls. Accordingly, the company has made provision for write off food inventory of Rs 16.63 crore in the quarter ended on 31 March 2020.

The company’s annual net sales rose 10.8% to Rs 1538.84 crore in fiscal year 2020 (FY20) over fiscal year 2019 (FY19). The company reported an annual SSSG of 4% in FY20. Driven by enhanced operating and supply chain efficiencies, the company’s Restaurant Operating Margins grew by 11.9% YoY, while the annual operating EBITDA clocked a growth of 15.8% to Rs 143.9 crore.

The onset of the COVID-19 pandemic brought forth the agility and customer forward strategies of Westlife Development. At the same time, the company took all possible measures to bring down fixed costs, further enhance operational efficiencies and conserve cash.
Westlife Development focuses on setting up and operating quick service restaurants (QSR) in India through its subsidiary Hardcastle Restaurants (HRPL). The company operates a chain of McDonald’s restaurants in West and South India, having a master franchisee relationship with McDonald’s Corporation USA, through the latter’s Indian subsidiary.

Net net we believe the coming year that is FY21 to be another challenging year as the full impact of lockdown and effect of social distancing will be fully impacted in coming year and any recovery can be expected only from FY22 onwards.

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