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Restaurant Brands full-year profit jumps 67%

Thursday 4th March 2010

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Restaurant Brands New Zealand, whose stock has tripled in the past year, said annual profit soared 67%, beating its forecast on KFC sales and a renegotiated supplier contract.

Shares of Restaurant Brands rose 11% to a 7 ½-year high of $2.02 after the announcement. Profit excluding non trading items was about $19.5 million, or 20 cents a share, in the 12 months ended February 28, from $11.7 million, or 12.1 cents a year earlier. That exceeds its November 30 forecast of $17.5 million.

“A combination of stronger-than-expected trading over the last quarter of the year, especially from its KFC stores, and the successful resolution of a pricing review with a major supplier” has helped lift profit, chief executive Russel Creedy said in a statement.

In December, the company announced it had renegotiated the chicken supply arrangements for its KFC business, splitting its purchases between New Zealand’s two largest chicken suppliers, Inghams Enterprises for the North Island and Tegel Foods in the south. The five-year supply contracts were on “slightly more favourable terms” than the previous nationwide contract with Inghams.

Restaurant Brands is due to release its formal full-year results on April 7 and today’s announcement was in a one-paragraph note to the NZX.

The retailer has worked hard to turn around its performance, improving turnover at its Pizza Hut chain in the face of fierce competition, and bolstering sales its most profitable KFC chicken outlets. Its Starbucks coffee stores haven’t performed as well.

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