Restaurant Brands forecasts 10% growth in FY2020

Restaurant Brands New Zealand continues to roll out new stores and look at buying others. Photo / Supplied

Restaurant Brands New Zealand said it anticipates net profit after tax to be at least 10 per cent higher next year as it continues to roll out new stores and look at buying others.

The fast-food operator has seen margins improve at its local KFC stores, which account for half of New Zealand revenues, but shrink at its Pizza Hut chain.

Net profit after tax for the 28 weeks ended September 9 was $20 million, which is 2 per cent lower than the first half of 2019. The company says profit was adversely impacted by $2.9m due to new accounting standards for leases.

It says the group will deliver full-year net profit, excluding non-trading items and the impact of the lease standards, of at least 10 per cent more than the year prior.

Growth will include new KFC stores in New Zealand and Australia as well as the opening of Mexican chain Taco Bell on both sides of the ditch by early 2020. Restaurant Brands wants to at launch at least 60 outlets on both sides of the ditch in five years.

Restaurant Brands says the increased performance of KFC New Zealand meant earnings before interest, tax, depreciation and amortisation were $72.6m, which is $3.4m or 5 per cent up on the first half of 2019.

It had already reported sales at $442.6m, an improvement of $11.6m, or 2.7 per cent, on the previous first half and 5.7 per cent more on a like-for-like basis.

In New Zealand, margins at KFC remain strong at 21.6 per cent of sales, up from 20.6 per cent in the first half of 2019.

In contrast, locally Pizza Hut's first-half gross margin was 2.7 per cent for 2020, down from 7.1 per cent in the first half of 2019, which the company attributed to continued competitive pressure and new food delivery companies entering the market.

Margins at Carl's Jr remained steady at 4.4 per cent from 4 per cent the year prior. The burger chain of 18 outlets had earnings of $800,000 from $19m in sales in the first half.

In Australia, results were weighed by an adverse exchange rate, but sales were up 1.4 per cent to $104.8m and earnings improved by 2.3 per cent to $15.5m.

In Hawaii, where Restaurant Brands has 36 Taco Bells and 43 Pizza Huts, the company made sales of US$70.9m ($112.4m), with earnings of US$9.4m.

The company advised in April it would scrap its interim dividend for the current financial year to support its growth plans.

Shares of the company were recently up 1 per cent at $11.28 and have gained 35.1 per cent this year.

Mexico's Finaccess Capital took control of the company in a partial takeover last year, paying $9.45 a share for 75 per cent of the stock.