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Restaurant Brands first-half profit surges 52%

Wednesday 20th October 2010

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Restaurant Brands NZ, the local owner of fast food franchises KFC, Pizza Hutt and Starbucks, first-half earnings surged 52% as its KFC franchises continued to underpin strong sales, taking the shares to a month-high.

The company reported net profit of $13.5 million, or 13.8 cents a share, in the six months ended Sept. 13, up from $8.9 million, or 9.1 cents a share, a year earlier.

Total revenue rose 3.9% to $176.6 million, with same store sales up 4.9%, still driven primarily through its KFC outlets. An interim dividend of 7.0 cents per share was declared, up 55.6% on last year, and payable on November 26. The shares rose 5.2% $2.65, the highest level since September 20.

Restaurant Brands was more guarded on its outlook, and maintained its profit guidance for the year of between $24 million to $26 million despite the strong interim result.

“Economic storm clouds still remain on the horizon and the full impact of the GST increase versus lower direct tax rates has yet to work through into consumer spending. Consumer sentiment is not bullish,” said chief executive Russel Creedy in the statement.

KFC is expected to continue to deliver solid profits but will be rolling over some very strong second half results from the prior year, while Pizza Hut and Starbucks Coffee will face input price increases, Creedy said.

The KFC unit reported strong sales growth driven by a transformation programme, with total revenues of $127.1 million, up 7.5% on the previous period, and up 7.9% on a same store basis. Earnings before interest, tax, depreciation and amortisation rose 20.1% to $28.8 million compared to the previous year.

Pizza Hut EBITDA rose 42.5% on last year to $3.1 million, driven by strong operational controls over wastage and labour, loss prevention initiatives, changes to menu with higher margin products and closures of unprofitable stores.

The closures of three loss making red roof restaurants saw total sales for the period fall 4.6% to $33.8 million. Same store sales were down 2.9%.

Starbucks Coffee produced an EBITDA of $2.0 million for the half, up 47.9% on the previous year, driven by improved operating efficiencies, strong exchange rates and the closure of poor performing stores.

Sales fell by $0.6 million or 3.8% on last year with three store closures, but rose 0.5% on a same store basis. Sales for the half year totaled $15.5 million.

The company also strengthened its balance sheet in the period, with total liabilities at $59.8 million, down $5.5 million on the full year balance, with total bank debt down $5.1 million to $12.6 million.

Creditors and accruals rose $11.3 million with the timing of creditor payments contributing to the significant increase. Debt has been re-classified as non-current with the renewal of the bank facility for a further two years with Westpac.

Businesswire.co.nz



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