Restaurant Brands shares slump after profit warning

Shares in Restaurant Brands slumped 21 per cent to an eight year low today after the company issued a profit warning yesterday.

The stock dived 25 cents to 94 cents on turnover of over half a million shares. The shares have traded between $1.14 and $1.53 during the year. The stock jumped to $1.66 just over a year ago after an aborted takeover bid.

The company, which holds franchises for KFC, Starbucks and Pizza Hut, announced after the market closed yesterday that while sales were expected to be ahead by 1.2 per cent, margins had been adversely impacted.

A combination of cost increases in labour, raw materials, utilities, freight and tightening economic conditions were expected to lower the net profit after tax to between $2.5 million to $3 million, excluding non trading items.

Last year's npat (excluding non-trading) was $6 million for the same period.

Restaurant Brands said that it expected the pressure of current economic conditions would continue, but anticipated an improvement in the second half of the year.

Initiatives included an upgrade of KFC's strategy which had incurred some short-term costs. It had recently renewed its KFC franchise for a further decade.

Restaurant Brands was finding it harder to sell off its less profitable Pizza Hut businesses in Victoria, Australia, but the impact on full year results was yet to be assessed.

Its half year sales will be reported on September 19 and profit results will be posted on October 12.

- NZPA