Restaurant Brands predicts lower first half profit

Restaurant Brands today reported a 1.4 per cent rise in same-store second quarter sales, but expected their first half year profit to be slightly down on 2004 figures.

The fast food operator reported same store sales of $95.34 million for the 16 week period ended September 12, up from $94.05 million for the same period last year.

Restaurant Brands operates KFC, Pizza Hut and Starbucks in New Zealand as well as Pizza Hut in Victoria, Australia.

Same store sales for KFC rose 1.3 per cent to $51.98 million, Pizza Hut NZ same store sales rose 2.6 per cent to $27.17 million, Starbucks same store sale were up 2.9 per cent to $7.36 million and Pizza Hut Victoria same store sales fell 3.1 per cent to $8.82 million.

Total store sales for the period rose 3.1 per cent to $98.23 million.

Chief executive Vicki Salmon said RB's net profit after tax and non trading items for the first half of the financial year was expected to be slightly below the previous year.

She said labour and freight costs have increased in New Zealand over the past year, while Pizza Hut NZ has seen a major increase in competition as well as the price of cheese and delivery costs.

"However, barring substantial increases in the levels of competitor activity or change in the current economic environment, the company continues to expect to produce a slightly improved profit result, excluding non trading items, in the second half of the year," Ms Salmon said.

She said the Victorian Pizza Hut business would be rationalised over the next six months, by re-franchising a number of stores to individual franchisees.

"This will ensure the continuity of the Pizza Hut brand in Victoria, whilst allowing the company to exit a number of stores that for reasons of volume or location are not suitable for continued corporate operation," she said.

Ms Salmon could not provide an update on ongoing talks between would-be buyer CVC Asia Pacific and one of RB's key franchisors International Inc (Yum!).

In June, the private equity firm CVC made a $160 million offer for the company, but in July said it was unable to proceed with the offer within the time frames stipulated by the Takeovers Panel.

CVC is still negotiating with International Inc (Yum!), one of RB's key franchisors, on franchise agreements to apply following any successful takeover offer.

Shares in Restaurant Brand fell 2c to $1.49 in a broadly weaker market this morning having ranged between $1.20 and $1.68 over the past 12 months.

- NZPA