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Restaurant Brands predicts flat annual profit, holds interim dividend

Friday 26th October 2012

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Fast-food franchise operator Restaurant Brands is forecasting a flat annual profit after reporting a mixed first-half result which included higher costs ahead of the startup of Carl's Jr stores.

Net profit rose 2.4 percent to $8.8 million in the six months ended Sept. 10 on a 0.2 rise in group revenue.

Including non-trading items, profit fell 9.2 percent to $6.9 million. The $2.9 million of non-trading items included a writedown of goodwill and store closure costs, and was up from $1.7 million the previous year.

The company is forecasting annual profit before non-trading items in the vicinity of $18 million, little changed from the $18.4 million reported last year.

The shares fell 0.8 percent to $2.44, and have climbed 20 percent this year.

The board declared a first-half dividend of 6.5 cents a share, unchanged from last year, and payable on Nov. 23.

General and administration costs of $7.2 million rose 17 percent due to the cost of establishing the Carl Jr brand. Three stores are expected to open in the second half of the year and the company expects them all to be immediately profitable.

The Pizza Hut brand performed significantly better than last year but Starbucks Coffee experienced a decline in sales and margins. Pricing changes, revised beverage formulations and a revamped food range are expected to turn Starbucks around.

The KFC brand is facing higher input costs in the second half but the chain will be boosted by new "fusion" stores.

The directors said they were comfortable with the overall trading result in a continuing challenging retail environment and they were particularly pleased with the performance of the Pizza Hut brand.

The group had total sales of $167.2 million in the first half, up from $166.8 million in the same period last year.

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