Restaurant Brands profit slips 4.5%, sees bigger earnings in 2013

Fast-food franchise operator Restaurant Brands New Zealand reported a 4.5 percent drop in annual profit, though it sees increased earnings in the coming year as its new product mix takes hold.

Net profit fell to $16.2 million, or 16.51 cents per share, in the 12 months ended February 28 from $16.9 million, or 17.3 cents, a year earlier, the Auckland-based company says in a statement. That was on a 1.3 percent gain in sales to $312.8 million.

The company is in the middle of tweaking its product mix by closing down unprofitable Starbucks Coffee stores while bringing on board new Carl's Jr burger outlets. The board expects better annual profit in the 2013 financial year and will give further guidance at the annual meeting on June 28 in Wellington.

"Directors remain confident in the underlying strengths of the company's brands and with maintaining tight controls and efficiencies, together with some overall improvement in the economy, are anticipating profit growth for the new financial year," the company says.

The board declared a fully imputed final dividend of 9.5 cents per share, taking the annual payment to 16 cents. The return is payable on June 28 to all shareholders on the register as at June 14. The dividend reinvestment plan will remain suspended for the payment.

Restaurant Brands' shares were unchanged at $2.72 and have gained 5.3 percent this year. The stock is rated an average 'hold' based on three analyst recommendations compiled by Reuters, with a median target price of $2.775.

Sales at KFC outlets, the company's best-performing brand, edged up 0.3 percent to $237 million, with a 0.6 percent decline in earnings before interest, tax, depreciation and amortisation to $45.3 million, with some pressure on labour costs coming to bear.

The Pizza Hut stores, which have struggled in recent years, lifted sales 5.3 percent to $47.9 million and ebitda jumped 81 percent to $3.8 million after ditching lower-margin stores.

Starbucks Coffee outlets reported a 5.1 percent fall in sales to $25.1 million, with a 22 percent slide in ebitda to $2.9 million, and it will close more stores in the coming year as their leases end.

Carl's Jr contributed $1.9 million in sales and made an ebitda loss of $500,000 after opening in November. The new branded stores are expected to break even after three to four months of trading and contributing significant sales volumes and a positive margin after the first full year of operation.

(BusinessDesk)