Restaurant Brands reports profit dip

Fast food operator Restaurant Brands today reported a 5 per cent full year profit drop and announced plans to sell its troubled Australian businesses.

The company, which owns the local Pizza Hut, KFC and Starbucks franchises, posted a net after tax profit -- excluding unusual items -- of $10.5 million for the 12 months to February 28, compared with $11 million a year earlier.

After adjusting for non-trading items, including asset writeoffs from refurbishments, the closure of non-performing New Zealand stores, and a $7 million write down relating to Restaurant Brand's troubled Pizza Hut Victoria chain, the net profit was just $3.4 million.

Restaurant Brands said the Victoria chain would be sold, over the next 12 months, to independent franchisees.

The troubled chain reported a net loss of $3.1 million for the year.

Restaurant Brands said that since acquiring the Victoria business in 2002 it had been unable to justify the store expansion needed to gain critical mass in the cut-throat pizza business.

The chain faced stiff competition from low cost independent operators and big brands like Dominos .

The decision to exit the business would give the firm a chance to focus on its New Zealand operations, where it could generate "superior returns".

Total sales for the period rose 2.1 per cent on the year ago period to $316.4 million, while earnings before interest, tax, depreciation and amortisation rose 0.1 per cent to $45.2 million.

The group declared a final dividend of 5.5 cents per share.

KFC sales rose 1.9 per cent on a same-store basis to $171.8 million. Pizza Hut New Zealand reported a 3.6 per cent increase in same store sales to $89.1 million, while Starbucks same store sales rose 14.4 per cent to $27.9 million.

Looking ahead, Restaurant Brands expected tighter trading conditions in the coming year, as the economy softened.

Shares in Restaurant Brands traded down 2c at $1.26 on the profit news, compared with a year high of $1.68 and a low of $1.20.

- NZPA