Covid crunch: Restaurant Brands half-year profit plunges almost 43% following five-week store closures

Restaurant Brands half-year earnings were significantly impacted by the coronavirus pandemic. Photo / Dean Purcell

Restaurant Brands' profit declined 42.9 per cent in the first half of 2020 as the fast food company that operates KFC, Pizza Hut, Carl's Jr and Taco Bell in NZ was disrupted by Covid-19.

The company, majority owned by Mexico's Finaccess Capital, posted a net profit after tax of $11.4 million for the 26 weeks to June 30, down $8.6m on the previous period, which stretched to 28 weeks due to a change in balance date.

Sales revenue totalled $383.4m, down $59.2m or 13.4 per cent, compared to $442.6m a year earlier. The company said it earnings were adversely effected by Covid-19.

Earnings before interest, tax, depreciation and amortisation (ebitda) fell $10.6m to $62.1m.

The company changed its balance date from February to December in the year ended December 19.

Scaling back the previous year's results to enable a 26 week comparison resulted in sales down $27.6m and net profit down $7.2m.

Restaurant Brands received $22.1 million in wage subsidies and retained all of its staff on full wages and salary during the lockdown period. While the wage subsidy helped offset the cost to the business, there was a shortfall of $500,000 per week, the company said.

The company said the five-week closure of its New Zealand stores under alert level 4 resulted in a loss in excess of approximately $40m.

Under level 3, operating only its drive-thru locations also affected its results.

Restaurant Brands will forgo paying an interim dividend. It said it continued to ramp up capital expenditure, investing in more than 60 Taco Bell outlets in New Zealand and Australia over the next five years.

Despite the challenges Covid-19 presented in the period, the directors were pleased with the company earnings in its first six months of FY20.

Although its overall earnings were down $8.6m, these had "recovered strongly" towards the end of the second quarter as NZ sales returned to near-normal pre-Covid sales levels.

Sales in its New Zealand business were down $56.2m or 24.3 per cent to $174.6m in the first six months of the year.

Store EBITDA dropped $9.1m, which the company attributed to a shorter comparable reporting period and the five-week store closures.

NZ sales had since bounced back after lockdown, led by strong performance of its KFC and Carl's Jr stores, it said.

Sales in Australia declined by 5.1 per cent to $94.4m in the period, while sales in the United States declined by 3.1 per cent to $68.7m.

In December, the group acquired 70 KFC and Taco Bell stores in California for US$73m ($109m).