BurgerFuel FY profit soars 55% on Middle East sales, cash plans

BurgerFuel Worldwide, the fast food chain franchiser, boosted annual profit 55 percent as sales in the Middle East continued to surge. The company will not pay a dividend as it builds up cash for investments.

Net profit rose to $1.1 million, or 2.05 cents per share, in the 12 months ended March 31, from $708,000, or 1.32 cents, a year earlier, the Auckland-based company says in a statement. Sales climbed 25 percent to $12 million, led by a 35 percent gain in Middle East revenue.

The company raised $2 million in December in a placement to Milford Asset Management in a year when its operating cash flows slumped 45 percent to $337,000. As at March 31, the company held cash of $4.2 million.

"In accordance with the previously outlined policy, since listing on the NZAX, there will be no dividends paid," the company says. "This is to ensure the group can build up and maintain adequate cash reserves for further investment into the business."

In recent years BurgerFuel has increased its exposure to the Middle East by signing master licensing agreements, which earns the company up-front territory fees and ongoing royalties based on store turnover.

The fast food chain is focused on breaking into Middle East nations and is part the Beachheads Global public-private partnership run by New Zealand Trade & Enterprise, which provides tailored mentoring for high-growth local companies.

The company lifted system sales 29 percent to $49.3 million. Total system sales represent till takings across all company-owned and franchise stores.

BurgerFuel increased New Zealand sales 17 percent to $8 million in the year, though earnings more than halved to $481,000. Its Australian segment revenue more than doubled to $560,000, turning profitable with earnings of $519,000.

The Middle East unit boosted sales to $3.5 million from $2.6 million a year earlier, with earnings more than doubling to $314,000.

The tightly-held stock trades infrequently on the small-cap NZAX, and was unchanged at $1.55 today, valuing it at $85.6 million. When the company went public in 2007 it sold 15 million shares at $1 apiece.

(BusinessDesk)