KFC stores will receive significant capital investment in
the new financial year. Photo by Gregor Richardson
Restaurant Brand directors proved yesterday they were
confident enough in their business to provide market guidance
for the new financial year, something which has been rare in
recent reporting seasons.
The company, which operates KFC, Pizza Hut, Starbucks Coffee
and Carl's Jr, reported an operating profit of $56.9 million
for the 52 weeks ended February 24, up nearly 4% on the
previous corresponding period.
The reported profit of $19.9 million was 23.5% on the pcp's
$15.2 million. A final fully-imputed dividend of 10c per
share took the total dividend to 16.5c, up 3.1% on the pcp.
Sales and total revenue were both up 5.6% and the operating
cash flow of $32.7 million was slightly down on the previous
Craigs Investment Partners broker Chris Timms said investors
took heart from the result and pushed the shares up 3% to
$2.98 following the announcement on the NZX. In the last 12
months, the shares had traded at a low of $2.65 and an
all-time high of $3.08.
''Directors have enough confidence and optimism to provide
guidance of $20 million of net profit for the next financial
year. Given we have seen shares get savaged if companies do
not meet forecasts, Restaurant Brand directors are confident
they can achieve their targets.''
The company's low level of debt and strong cash flow had
allowed it to keep its strong position in the market. Main
competitors included Burger King, McDonalds and various pizza
chains such as Dominos and Hell Pizza.
''Restaurant Brands is trading on the right side of things,''
Mr Timms said.
Forsyth Barr broker Suzanne Kinnaird said the company's 2015
guidance was in line with her current forecast of $20 million
in reported profit.
''The company indicated a strong start to the year to date.
We expect the positive momentum to continue, helped by an
improving economic backdrop.''
Restaurant Brands had successfully turned around both Pizza
Hut and Starbucks. KFC was benefiting from some price
normalisation in the industry, with less emphasis being
placed on aggressive value campaigns.
Carl's Jr, which so far only operated in the North Island,
would benefit from further supply chain localisation, new
store openings and increased understanding of day-to-day
trading which helped to reduce waste and for labour
scheduling, she said.
Company chief executive Russel Creedy said the retail sector
was not ''particularly robust'' in the first half of the year
and competitive activity, particularly in price discounting,
The company met the dual challenges of both maintaining
market share and margin in a competitive environment while
building a new brand.
''Restaurant Brands will be in a strong position to benefit
from the general economic recovery in the coming year.''
KFC would see significant capital investment over the new
financial year as the brand focused on bringing the remainder
of its network up to new-store standard.
With some management changes, and a renewed focus on
operational performance, the brand was expected to deliver
both sales and margin growth in the 2015 financial year, he
''Pizza Hut will continue to maintain its sales and margin
momentum with another year of solid same store sales and
earnings growth anticipated.''
Store sales to independent franchisees would continue, but at
a slower pace.
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