By PAM GRAHAM AND NZPA
Restaurant Brands shares rose 7 per cent yesterday after the operator of KFC, Pizza Hut and Starbucks chains reported a 27.5 per cent rise in first-half earnings.
The company said it was on course to meet market expectations of an annual profit of $10.5 million.
Warren Doak, of Macquarie Equities, said the market already had sales figures and it liked the look of the profit margins in yesterday's result.
Also, the stock was not frequently covered by analysts so some earnings projects were out of date and were now being upgraded.
The profit of $5.4 million for the half year was up from $4.3 million last year and was achieved on sales of $167.8 million, up from $167.1 million.
A fully imputed interim dividend of 4.5c a share was declared, in line with the previous year.
The company operates KFC and Starbucks in New Zealand, and Pizza Hut in New Zealand and Victoria, Australia.
Restaurant Brands said KFC was "firmly back on track" but had been affected by the increased cost of petrol, labour and chicken feed.
Every KFC store had been examined during the half year and new products and promotions were introduced.
Total KFC sales for the first half were $92.3 million, down 2.2 per cent on the previous year. The fried chicken franchise's operating earnings were $13.9 million, down 2.4 per cent on the previous year, but had a consistent margin at 15.1 per cent of sales.
Pizza Hut New Zealand posted a 14.5 per cent rise in operating earnings of $7.6 million, while Starbucks Coffee's operating earnings rose 33.4 per cent to $1.8 million.
Pizza Hut Australia posted a small profit of $200,000, turning around last year's loss of $300,000. Restaurant Brands shares rose 9c to $1.35.
The company said KFC would continue to have stable margins, Pizza Hut New Zealand had a leading market position and Starbucks was expected to continue to increase sales.
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