KEY POINTS:
Restaurant Brands today said it had cut its dividend after it reported a loss of $3.6 million in the February year.
Net profit after tax excluding non trading items was $6.5 million for the 12 months, compared to $12.3 million for the prior year.
The overall group loss
resulted from non-trading charges of $14.4 million, largely arising from exit costs and writedowns on the Pizza Hut Victoria investment.
Restaurant Brands said total sales for its New Zealand operations were up 1.7 per cent to $293.6 million, with same store sales up 0.8 per cent.
Record sales were achieved for KFC at $182.7 million -- up 7.1 per cent on a same store basis -- and Starbucks Coffee at $31.3 million -- up 3.2 per cent for the same stores.
But the Pizza Hut New Zealand business had a particularly difficult year, with some significant reductions in sales volumes and consequent flow on effects to profitability.
The impact of major competitor growth and aggressive pricing activity had seen sales drop 10.5 per cent to $79.7 million for the year -- a same store drop of 11.8 per cent.
Given the reduction in earnings in the past year and the associated adverse impact on cash flow, together with significant capital commitments for the KFC transformation project and franchise renewal payments, the board had elected to reduce the final dividend to 3 cents per share, the company said.
That brought the total dividend for the year to 5.5 cents.
Looking ahead, Restaurant Brands said KFC was expected to continue to generate sales and margin growth at similar levels to the past year.
The company would continue to invest significant levels of capital to complete its store transformation programme.
A recovery in sales and margin was expected in the Pizza Hut New Zealand business, but that would take some time as new operational and marketing initiatives took effect.
Starbucks Coffee would see continued sales growth and a margin improvement.
The large number of changes being made to the Pizza Hut New Zealand business, coupled with the final exit from Victoria and the continuing positive momentum in KFC, would deliver a significant improvement in operational performance, the company said.
Last month, the company's chief executive, Vicki Salmon, resigned with immediate effect, with chairman Ted van Arkel saying agreement had been reached that it was time for some new blood in the organisation.
Today the company said the sale of the Pizza Hut Victoria business was now largely finished, with 27 stores sold to independent franchisees or closed by the balance date, five more stores settled later, and sale and purchase agreements in place for most the remaining 18.
For KFC, the brand transformation had continued its roll out with significant sales growth in 21 transformed or new stores and further stores planned or under construction for the new fiscal year, Restaurant Brands said.
Earnings before interest, tax, depreciation and amortisation (ebitda) improved by $1.6 million, 5.4 per cent, to $31.2 million, while KFC store numbers were down one to 87.
For Starbucks, the combined impact of higher labour costs and lower exchange rates last year meant the brand was under some margin pressure, the company said.
Starbucks' ebitda was $3.6 million, $300,000 behind the prior year.
Three new stores were opened, taking store numbers to 47 by year end.
At Pizza Hut New Zealand the drop in sales, together with cost increases, particularly in labour, had seen margins suffer accordingly.
The brand's ebitda was $5.1 million for the year, $6.8 million down on the prior year.
A number of new operational and marketing initiatives were under way.
As part of the announced strategy of progressively closing red roof restaurants, four were closed over the year, bringing store numbers to 103.
Net group investments totalling $29.7 million in new stores, store upgrades and information technology were made during the year. Expenditure on KFC stores made up more than half the total.
As a result, borrowing levels had increased over the prior year with bank debt up to $48.6 million. New banking facilities of $70 million were put in place at year end to meet future requirements, Restaurant Brands said.
Restaurant Brands shares were unchanged around 11am today at 90c, near the year low of 89c hit last week, and down from a year high of $1.29 last June.
- NZPA
