Restaurant Brands profit up 33 per cent

Fast food company Restaurant Brands today posted a 33 per cent rise in its February year profit to $10.7 million and the company said it expects to maintain its sales and profit improvement in the current year.

However, it said increased cost pressures, particularly in labour and to a lesser extent in facilities, would translate to some pressure on margins in the new financial year for all brands.

Short-term closures required for major refurbishments as part of the KFC transformation process would also adversely affect sales and short-term profit performance in those stores.

"In total, the company expects to produce a slightly improved profit result (excluding non trading items) for the new financial year.".

The 2004/5 figures were for 53 weeks rather than the normal 52.

Shareholders liked the result, lifting the stock 7 per cent, or 9c, to $1.34.

All four divisions recorded profit improvements in 2004/5 with total store ebitda (earnings before interest, tax, depreciation and amortisation) up 11.9 per cent to $45.2m.

Total sales for the group rose 3.6 per cent to $315.5m. Three out of the four operating divisions showed positive same store sales growth for the year with Pizza Hut New Zealand same store sales marginally negative (0.7 per cent) mainly due to the impact on adjacent stores of building a number of infill stores.

A fully-imputed, unchanged, final dividend of 5.5 cents per share payable on 10 June was declared.

Total store ebitda increased $4.8m to $45.2m for the year, giving an ebitda margin of 14.3 per cent against 13.3 per cent in the prior year.

Despite the higher levels of activity, general and administrative costs were kept below last year's levels at $12.5m.

Depreciation, amortisation and interest costs were all marginally up on prior year, reflecting new store development.

Total store numbers increased by twelve to a new high of 278, with most of the growth (10 stores) coming from Pizza Hut New Zealand expansion.

The KFC division sales improved 1.1 per cent over prior year (0.1 per cent on a same store basis) to $173.1m. KFC ebitda rose 8.5 per cent to $27.8m.

Ebitda margins rose from 15.0 per cent to 16.1 per cent.

The total number of KFC stores fell to 87 with the closure of an unprofitable mall store in Porirua.

KFC has begun a brand refurbishment programme which has seen sales improve strongly in the Frankton store where it was started.

The Pizza Hut New Zealand business had strong sales and margin growth in an increasingly competitive environment. Total sales of rose 7.7 per cent ot $87.6m, largely driven by an accelerated new store roll out programme. Ebitda margin rose slightly to 15.6 per cent and ebitda rose 10.8 per cent to $13.6m.

Starbucks Coffee sales rose 7.8 per cent to $24.9m. Same store sales rose 3.6 per cent and ebitda rose 21.7 per cent to $3.7m.

Pizza Hut Victoria, Australia was profitable for the first time with a $40,000 ebitda profit. Sales 5.6 per cent to A$27.3m (NZ$30m) and same store sales improved 3.8 per cent.

Group cash flow fell slightly to $23.4m.

- NZPA