KFC still boosting Restaurant Brands profits

KFC is still bringing in the bacon for Restaurant Brands

A strong result by KFC has boosted Restaurant Brands' group annual profits, excluding non-trading items, by 13 per cent to $11.7 million.

But when $5m of non-trading items were included - primarily impairment charges against goodwill for Pizza Hut - net profit fell 1.2 per cent from the previous year to $8.3m.

Revenues of $309.6m in the year to the end of February were up 1.8 per cent on a year earlier, with same store sales up 1.6 per cent, Restaurant Brands said today.

KFC had another sales record at $211.5m, which was up 4.1 per cent on a same store basis. Starbucks Coffee was flat at $33m, up 3.6 per cent on a same store basis.

Those results were partly offset by lower sales of $64.6m for Pizza Hut, down 6.5 per cent same store, the company said.

A final dividend of 4c per share will be paid, bringing the total dividend for the year to 7c from 6.5c last year.

Directors were cautious about next year's outcomes, despite this year's trading results being satisfactory in the current environment and an improvement over the past two years' performance, Restaurant Brands said.

KFC was expected to continue to deliver sales growth.

For Pizza Hut same-store sales were expected to grow but continued competitive pressures and cost increases would limit any significant profit recovery.

The company would be evaluating some potential store sales to independent franchisees and would continue its programme of unprofitable store closures, particularly of Pizza Hut's red roof stores.

Starbucks Coffee was expected to continue its steady same store sales growth and produce a margin improvement on this year.

"The 2008/9 year has seen some profit improvement driven purely by the KFC business," the company said.

"Continued improvement in bottom line results requires this momentum to be sustained and both of the other brands to demonstrate a solid turnaround in their bottom line performance. This will not be easy in the current environment."

Given the uncertain climate and continued cost pressures, a similar profit performance in the new financial year was expected.

In the latest year total store earnings before interest, tax, depreciation and amortisation (ebitda) for the year were down $500,000 to $43.7m.

KFC's ebitda improvement of $2.1m to $38m was offset by ebitda reductions in Pizza Hut of $1.7m and Starbucks Coffee of $900,000 .

Year end store numbers at 219 were nine down on February 2008 following four Pizza Hut store closures, mostly as part of the red roof exit strategy, two Starbucks Coffee closures and three closures of KFCs which were at the end of their leases.

All closures had been margin positive.

Restaurant Brands shares closed at 85c yesterday, having ranged between 92c and 57c in the past year.

- NZPA