Restaurant Brands lifts dividend
RESTAURANT Brands shareholders were rewarded with a significantly increased dividend after the fast food company delivered higher sales and profit for the year ended February 26.
The operating profit was up 48% to $139.3 million from the $95.5 million reported in the previous corresponding period.
The reported profit rose 36.6% to $35.5 million from the $25.9 million in the pcp.
And the dividend increased
5c, or 21.7%, to 28c per share.
Total sales were up 49% to $740.8 million.
Group chief executive Russel Creedy said the past year had meant the successful execution of Restaurant Brands’ major growth strategies, as the company continued to expand its global reach.
The expansion included the acquisition of additional KFC stores in Australia and the settlement of the Hawaiian acquisition.
Hawaii not only added a new geography but also a new brand, as 37 Taco Bell stores — together with 45 Pizza Huts — were brought into the group network.
The continued expansion into the Australian market, through the acquisition of additional KFC stores in New South Wales, brought total store numbers there to 61, he said.
Integration of the recently bought Australian stores and the Hawaiian business into the wider Restaurant Brands group had been almost seamless, as local management aligned with and actively pursued the company’s growth strategies in each of their individual markets.
Group store numbers were now 314, made up of 171 in New Zealand, 82 in Hawaii and 61 in Australia.
New Zealand operating revenue for the period was $446.8 million, up 6.3% on the pcp.
Again, KFC contributed strongly to the New Zealand results. KFC produced sales of $339.4 million, up 7.8%. Successful product promotions and the introduction of a delivery service in selected stores contributed to the strong sales performance.
KFC’s operating profit of $66 million was up 7.4% on last year and the profit margin for the period was nearly 21%.
Restaurant Brands was continuing with its transformation of the Pizza Hut network in New Zealand to a master franchise model.
Total network sales of $100.7 million were up 10% on the pcp. The group’s Pizza Hut earnings were $3.1 million (7.4%) of sales, down $1 million or nearly 25%. The result reflected margin pressure, particularly in relation to increased labour rates and ingredient costs.
The company’s smallest brand, Starbucks Coffee, produced another consistent result. Total sales were down marginally to $25.8 million, reflecting the reduced store network. Same store sales were up 6.3%.
The brand reported earnings of $4.8 million, slightly up on the previous period, despite the reduced number of sales.
Looking ahead, Mr Creedy said from a sound, established position in both the Australian and United States (Hawaii) markets, the company had significant scope to expand further in both geographies through acquisition, store refurbishments and organic growth.
At the same time, organic growth opportunities within the New Zealand business would be pursued.
The company was not anticipating any significant change in the economic and competitive environment or unusual costs in the new financial year.
Restaurant Brands provided 2019 reported profit guidance growth of at least 10% on 2018 results. More details would be provided at the annual meeting in Wellington on June 21.