Restaurant Brands, a barometer of the domestic economy, yesterday reported an interim profit slashed nearly in half and a reduced dividend.
Earnings before interest and tax for the six months ended September 12 fell 44.6% to $10.86 million, down from $19.6 million in the previous corresponding period.
Total sales were down 5.6% to $166.5 million from $176.3 million in the previous period.
The reported profit was down 44% to $7.6 million from $13.5 million.
An interim dividend of 6.5c per share will be paid, down from the 7c paid in the previous period. All three brands operated by Restaurant Brands were down in profit.
Pizza Hut was the worst affected, with its operating earnings falling nearly 67% in the period to $1 million on $24.6 million revenue, down 27.2%.
Most of the sales drop was the result of store sales to independent franchises - 11 sold to date, six in the past half-year.
But same-store sales still fell by 14.5%.
KFC's operating profit was down 19.5% to $23.2 million on increased sales of 0.7% to $127.9 million.
Starbucks Coffee sales fell 9.7% to $14 million and operating earnings fell 15.1% to $1.7 million.
Chief executive Russel Creedy said the first half of the year was characterised by an extremely challenging trading environment.
"The significant improvements seen over the past two to three years have positioned Restaurant Brands well in the current retail downturn and the company has a number of initiatives under way to boost performance over the second half of the year."
The February earthquake in Christchurch, and the June 13 aftershock, had adverse effects on all three businesses in the region, causing the closure of 19 stores and costing the company an estimated $3.8 million in lost sales.
Of the 19 closed stores, 15 were now fully operational but three Starbucks stores and one KFC store in the central business district remained closed and might not reopen, he said.
Looking ahead, Mr Creedy said the reported period was challenging compared with the very strong first half of the 2010-11 year.
"The economic downturn persists and there are continuing pressures on sales and margins."
With the start of the Rugby World Cup, there had been some positive signs of growth, particularly in the KFC business. But the sustainability of the growth was still uncertain, he said.
The impact of the GST increase rolled out of the accounts on October 1 but consumer sentiment remained bearish and retail sales uncertain.
Directors anticipated an improving trend in profit in the second-half for a full-year reported profit of about $20 million, Mr Creedy said.
