Tegel falls fowl of price weakness
Restaurant Brands could gain from low chicken prices
Tegel’s pain should be
Restaurant Brands’ gain when it comes to the fastfood operator’s crucially important KFC division. The NZX-listed firm reports its half-year result on Wednesday, which may reveal a bottom-line boost from a slump in chicken prices, the result of oversupply issues facing local poultry producers.
Statistics New Zealand’s latest Food Price Index showed the price of this country’s favourite meat had fallen 11 per cent over the 12 months to September to a nine-year low.
Last week, analysts at First NZ Capital said a recent slump in Tegel’s stock price could be the result of investors reacting to weak domestic poultry prices.
Shares in the Auckland-based Tegel, which listed at $1.55 in May, have fallen from a high of $1.78 in August to close at $1.53 yesterday.
Restaurant Brands, on the other hand, is likely to be banking the benefits of the glut. KFC’s margins were already on the up when the firm reported its full-year result in April.
The division’s earnings before interest, tax, depreciation and amortisation (ebitda) rose 12.6 per cent to a record $57.2 million for the 12 months to the end of February.
Revenue has also been tracking along nicely, with KFC’s sales in New Zealand rising 3.7 per cent to $92m in the second quarter.
Restaurant Brands shares have gained about 35 per cent over the past year, closing at $5.47 yesterday.
The company also operates Starbucks, Carl’s Jr and Pizza Hut in New Zealand, as well as 42 KFC stores in New South Wales that were acquired in April.
Chicken prices are expected to increase next year as supply and demand comes back into balance.
Name change?
“We still get people phoning us to ask what to do with the Sunday roast.” That was Hellaby Holdings managing director Alan Clarke’s response when asked whether the firm could do with a new name.
Obviously people are getting the NZX-listed company confused with Otahuhu-based meat processor Wilson Hellaby.
With that in mind, could Hellaby Holdings benefit from a new name?
Maybe something that better represents its core operations in the automotive and resource services sectors? “Look, it’s possible,” Clarke said. “But right now I think we have other things in front of us and when it comes to re-brands you’ve got to have a good reason for doing it.” Things are certainly busy at Hellaby right now. The Auckland-based firm is the subject of a $3.30 a share takeover bid from ASX-listed automotive operator Bapcor.
Meanwhile, Clarke — who arrived at Hellaby in November — is pushing to streamline its portfolio in the hope of stopping it from being identified as an investment holding company — a type of business that has fallen out of favour with the market. Hellaby shares closed at $3.34 yesterday.