Sharechat Logo

Restaurant Brands continues its slow downward slide

Friday 10th October 2003

Text too small?
If Restaurant Brands were a pizza it would probably be a spicy chicken number. The problem is the chicken doesn't taste quite as good as it should.

The fast-food operator this week reported a 15% drop in half-year net profit mainly due to poor KFC sales in New Zealand and Australia.

Investors have by no means shunned the stock, despite a number of challenges facing the company.

The shares gained 9c to $1.34 following the $4.3 million profit announcement and the company is a favourite of traders on internet chat sites.

In its latest research note, ABN Amro maintains its hold recommendation on the stock while noting investor concern over the sustainability of Restaurant Brands' attractive dividend yield of about 11.5%.

Increasing competitive pressure combined with the resignation of former chief executive Jim Collier add further worry but ABN is confident the company can sustain the current dividend.

A replacement CEO is not expected for another three to four months.

A major concern for investors is the future growth potential of the company.

The company no longer views KFC as a mature division but sees further opportunity for organic growth in the New Zealand market.

However, same store sales have been negative for the past four quarters and the division is still coming to terms with the loss of former general manager Chris O'Reilly.

The company has done the hard yards in the past but it will be up to a new team to carry that through.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar eases on technical factors, buoyed by higher dairy prices
RBNZ eyes Westpac Australia money laundering failures
Heritage buys Golden Healthcare; not mystery Metlife suitor
Alliance margins improve as swine fever boosts global meat prices
RBNZ eyes Westpac Australia money laundering failures
Precinct eyes new developments as Commercial Bay keeps to revised schedule
End to Tower's three year dividend drought in sight
Vital Healthcare's manager appoints new independent director
Argosy lifts first-half profit 15.2% on valuation gains
Metlifecare attracts 'credible' bidder after biggest trading day in 2 1/2 years

IRG See IRG research reports