KFC boosts Restaurant Brands profit

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DEEP FRIED PROFIT: Restaurant Brands has reported a large lift in profit, thanks mainly to its KFC chain.

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Restaurant Brands is reporting full year net profit, excluding non-trading items, up 70 percent to $19.9 million.

The bulk of the improvement came from another solid performance by KFC, but both the Pizza Hut and Starbucks Coffee businesses recorded improved profitability, the company said today.

Total revenues for the year to February 28 rose 2.8 percent to $318.3m, while same store sales were up 6.8 percent.

A final full year fully imputed dividend of 8c per share is to be paid, making a full year dividend of 12.5cps, 5.5cps up on the previous year.

Total sales at KFC rose 5.5 percent to $223.2m, which was 9.2 percent higher on a same store basis, Restaurant Brands said.

During the year six KFC stores were rebuilt, taking the total number of rebuilt or refurbished stores to 40, nearly half the total network.

Store numbers rose to 85 with the opening of a new store at Greenlane in Auckland.

Earnings before interest, tax, depreciation and amortisation (ebitda) at KFC rose 21.8 percent from the year before to $46.3m.

The Pizza Hut business finally began to return to profitability in the 2009/10 financial year, the company said.

Sales of $64.2m were down 0.7 percent, with two fewer stores. Same store sales lifted 3.9 percent, the first time Pizza Hut had a rise in same store sales since 2002/3.

Ebitda at Pizza Hut rose 95 percent to $5.4m, due to the leverage from the sales growth and the closure of unprofitable stores, together with margin improvement initiatives and continued emphasis on improved controls.

Pizza Hut had 91 stores at the end of the year.

At Starbucks Coffee revenues fell 7.6 percent to $30.5m, with sales down 2.9 percent on a same store basis.

Despite the sales result, Starbucks lifted ebitda 9.6 percent to $3.2m, helped by a more favourable exchange rate, enhanced in-store controls, and some product rationalisation.

A Starbucks store in Palmerston North was closed when its lease ended, bringing store numbers at year end to 41.

For the new financial year, Restaurant Brands' directors were "cautiously optimistic" of producing a profit slightly in excess of $20m.

The pace of investment in the KFC brand transformation programme would be increased and at least two new stores would be opened, while same store sales growth was expected to continue, the company said.

At Pizza Hut the momentum of same store sales growth was expected to continue.

The sale of stores to independent franchisees would be pursued as would the programme of unprofitable store closures.

Starbucks Coffee was expected to return to same store sales growth and produce further margin improvement on the current year.

In the 2009/10 year net profit, including non-trading items, rose to $19.5m from $8.3m the year before.

Bank debt was reduced by $16.6m, following an $8.2m reduction the year before, with Restaurant Brands saying it continued to reduce borrowings on the back of strong operating cash flows.

Restaurant Brands shares closed at $2.03 yesterday, having reached $2.05 during the day, the highest level - also reached April 1 - in nearly eight years.

- NZPA