The Guzman Y Gomez Ltd (ASX: GYG) share price is sinking on Friday morning.
At the time of writing, the Mexican fast-food chain's shares are down 8% to $41.24.
This follows the release of the company's half year results.
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Guzman Y Gomez share price sink on results day
- Network sales up 22.8% to $577.9 million
- Revenue up 27% to $212.4 million
- EBITDA up 28.3% to $31.6 million
- Profit after tax up 91.2% to $7.3 million
- Guidance: On track to exceed prospectus profit forecast
What happened during the half?
For the six months ended 31 December, Guzman Y Gomez reported a 22.8% increase in global network sales to $577.9 million.
The company's Australia segment (which includes Singapore and Japan) was the main driver of growth, achieving 9.4% comparable sales growth and contributing $573 million in total network sales. Management advised that this strong result was due to the success of its delivery business, effective marketing campaigns, and high demand for value menu items such as the $12 Chicken Mini Meal.
Things weren't very positive in the United States (US) segment, which could be weighing on its shares today. The US segment experienced a 12.7% decline in network sales to $4.9 million. Nevertheless, management is spinning this decline as an "opportunity to increase brand awareness and improve the guest experience."
It was the same story for earnings, with Australia EBITDA increasing 37.3%. This was partially offset by a 62% decline in United States EBITDA to a loss of $5 million.
On the bottom line, the company reported a massive 91.2% in net profit after tax (albeit from a small base) to $7.3 million.
Management commentary
The company's founder and CEO, Steven Marks, was pleased with the half. He said:
GYG's first-half 2025 performance and growth in sales and earnings showcases our guest's love for our food, but also the strong execution of our strategy and our unwavering commitment to exceptional guest experience.
Our strong 2025 half-year results demonstrate the appeal of our clean, fresh, made-to-order, Mexican-inspired food, leading to significant global network sales growth of 23%. The growth in network sales contributed to a 28% EBITDA uplift as corporate restaurant margins expanded and franchise revenues increased.
Marks also revealed that the company has a large pipeline of new store opportunities to bolster its growth in the coming years. He said:
We finished the half with 239 restaurants globally, opening 19 new restaurants (16 in Australia). We have more than 100 future restaurants in our pipeline, all in AAA locations, positioning us well for solid expansion in the coming years.
Outlook
During the first seven weeks of the second half, Australia segment comparable store sales growth has been above expectations at 12.2%. Management notes that this reflects continued trading momentum from the first half and a lower prior corresponding period.
In light of this, the company advised that it expects to exceed its FY 2025 net profit after tax prospectus forecast.
