Jollibee Foods Corporation, headed by Tony Tan Caktiong, CEO & President, reported a 3.8 percent drop in profits last year as price increases and earnings from acquisitions failed to offset the impact of rising raw material costs on margins.

The firm disclosed to the Philippine Stock Exchange (PSE) yesterday that its net income fell to P2.3 billion from P2.39 billion in 2007.

Net income in the first three quarters of the year dropped by a steeper 9.7 percent to P1.64 billion. Margins improved in the last quarter as a result of price increases and lower raw material costs and cost cutting measures, said JFC chief finance officer Ysmael Baysa.

Baysa said earlier that profits contracted for three consecutive quarter starting in the fourth quarter of 2007 to June last year due to the rapid increase in the cost of raw materials and utilities.

Profits were also eaten up by high interest expenses which shot up 60 percent to P88.76 million from P55.47 million in 2007 while interest income dipped 0.5 percent to P142.28 million.

Revenues grew 13.9 percent to P44.19 billion from P38.81 billion in 2007, boosted by new store openings and acquisition of a new business.

JFC said systemwide sales from foreign operations jumped 74.6 percent due to the acquisition of a restaurant chain in Beijing in October. Excluding this, foreign sales grew 53.6 percent but domestic sales rose by a lower 11.3 percent.

Domestic sales account for the bulk of the firm’s revenue base with foreign operations accounting for only 15.9 percent of revenues.