Restaurant Brand's full-year after-tax profit slumped 27% in the wake of losses from the Christchurch earthquakes and sale to franchisees of 13 Pizza Hut outlets - but shareholders were unfazed.
Total revenue for the year to February was down $16 million, or almost 5%, from $308.9 million to $324.9 million, while after-tax profit was down $6.7 million, or 27%, from $25.1 million to $18.4 million.
Earthquake costs to Restaurant Brands' KFC outlets, through lost sales, temporary closures and one closure, were estimated at $3 million and Starbucks sales losses at $2.5 million.
Total sales revenue for Pizza Hut was down $13.8 million to $45.5 million, including $5.9 million from the sale of outlets to franchisees.
Restaurant Brands shares were up 3.2% at $1.92 on light trading after the announcement. A 9c-per-share dividend will be paid, taking the full-year dividend to 16c.
Chief executive Russel Creedy said the Christchurch earthquakes and the accelerated sale of Pizza Hut stores to franchisees "weighed on group sales and profit" but the underlying result also reflected a tough trading environment and higher input costs.
"These factors were most evident in the first half, accounting for $5.3 million of the $6.7 million reduction in net profit after tax. In the second half of the year these factors were mitigated by some cost reductions and a focus on more profitable lines," he said in a statement yesterday.
Craigs Investment Partners broker Peter McIntyre said while there were several "one-off impacts" to consider in the results, the market was taking a long-term and positive view, reflected in the 3% gain in share value.
"Their new fourth brand, Carl's Jr, will have up to four [inaugural] shops this year and are expected to be immediately profitable," he said.
Forsyth Barr broker Tom Bliss said the after-tax profit and dividend were slightly down on Forsyth Barr estimates, but were otherwise in line with expectations.
However, because of the continued tough trading environment, he is maintaining a "hold" recommendation on the stock and valuation around $2.24.
"We'll be watching the launch of the burger chain [Carl's Jr] with interest. Being a highly competitive sector to enter, Restaurant Brands will need to prove its ability in that area," he said.
While KFC and Starbucks were trading as expected, Pizza Hut had continued to struggle despite new products and marketing ploys, he said.
Mr Creedy said although results were down on the previous "stellar" year, the 2012 profit performance was "satisfactory", given the tough economic environment.
"The company is expected to produce a result of at least the same level in the year ahead," he said.
KFC grew its sales to a high of $236.3 million, an increase of 0.2%, but after quake costs its earnings before interest, tax, depreciation and amortisation (ebitda) fell by $6.6 million to $45.6 million, or 19.3% of sales.
Pizza Hut sales revenue was down $13.8 million to $45.5 million and after store sales, lower same-store sales and higher input costs, ebitda fell from $5.6 million a year ago, by $3.5 million to $2.1 million.
Starbucks Coffee sales were down from $29.3 million a year ago to $26.5 million, largely due to the quakes, with ebitda slightly down, from $4.11 million last year to $3.7 million, or 14.2% of sales.
Restaurant Brands
full-year operations . . .
Pizza Hut: 71 stores; 13 stores sold to independent franchisees.
KFC: 88 stores (59 refurbished). Permanent closure Chch CBD outlet.
Starbucks: 35 stores; 3 Chch closures.
Carl's Jr: Fourth brand acquired from US for NZ chain. Four opening this year.
• Overall outlets down 14 to 194 a year ago.
