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Restaurant Brands lifts FY profit 37%

Restaurant Brands lifts FY profit 37%; eyes future expansion

By Tina Morrison

April 17 (BusinessDesk) - Restaurant Brands New Zealand increased annual profit 37 percent after the fast-food operator lifted earnings in its local market and benefited from its expanded business through Australia and Hawaii.

The Auckland-based company said net profit rose to $35.5 million, or 28.83 cents per share, in the 52 weeks ended Feb. 26, from $26 million, or 24.08 cents, a year earlier. Sales jumped 49 percent to $740.8 million.

Full-year profit excluding non-trading items lifted 32 percent to $40.4 million, in line with the company's forecast for about $40 million. The company said today that profit on that measure would lift at least 10 percent next year.

Restaurant Brands holds the rights to the KFC, Pizza Hut, Starbucks Coffee and Carl's Jr brands in New Zealand and has expanded its business to KFC in Australia and Taco Bell and Pizza Hut in Hawaii, with almost half of sales generated overseas in the latest year. Today the company detailed its plans for future growth, including expanding its KFC business in New Zealand and Australia and potentially acquiring KFC operations in Hawaii and the US. It also plans to further develop its Pizza Hut business in New Zealand and Hawaii and may introduce the Taco Bell business to New Zealand and Australia, expand the business in Hawaii and potentially acquire Taco Bell operations in the US.

"The full effects of two major acquisitions is evident in this year’s financial results," Restaurant Brands said. "From a sound, established position in both the Australian and US (Hawaii) markets the company now has significant scope to expand further in both these geographies through acquisition, store refurbishments and organic growth. At the same time, organic growth opportunities within the New Zealand business will be pursued."



The expansion has seen the company's bank debt lift to $166.8 million at the end of the financial year, from $46.5 million at the end of the previous year. At balance date, it had bank debt facilities of $253 million in place. In September last year, Restaurant Brands dual-listed on the Australian Securities Exchange to enable it to access additional pools of capital that may be needed to fund future acquisitions.

The company will pay a final dividend of 18 cents per share on June 22, taking its annual dividend to 28 cents, up from 23 cents a year earlier.

In the latest year, the company's New Zealand operations lifted earnings before interest, tax, depreciation and amortisation by 6.5 percent to $75.8 million, largely due to the performance of its KFC business which increased ebitda 7.4 percent to $66 million. It wrote down the value of its Carl's Jr chain by $1.2 million and said the business was focused on generating profitable sales rather than driving volume through discounting and promotional activity.

In Australia, ebitda jumped to $22 million from $15 million after the KFC business was acquired in April 2016, part way through the company's 2017 financial year, and more stores were added during the 2018 financial year.

In the Hawaii business that Restaurant Brands acquired in March 2017, the operation contributed $24.1 million in ebitda.

Restaurant Brands shares slipped 0.6 percent to $7.10, having gained 32 percent over the past year.

(BusinessDesk)

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