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NEW ZEALAND – Restaurant Brands raises annual profit forecast

Restaurant Brands New Zealand, which operates the New Zealand outlets of KFC, Pizza Hut and Starbucks Coffee, raised its annual profit forecast as it benefits from lower input costs, higher sales and restructuring of stores.
Full-year profit, excluding the sale and leaseback of stores, will exceed $22 million, the Auckland-based company said in a statement. That’s higher than the company’s $20 million forecast in April and the $18.9 million posted last year. The company’s shares jumped 5.7 percent to $3.70, making them the best performer on the benchmark NZX 50 Index.
Restaurant Brands today said first-half profit for the 28 weeks ended 8 September 2014 rose 19 percent to $11.5 million as a 9.1 percent gain in revenue outpaced a 6.8 percent increase in the cost of goods sold. Gains in profitability across its KFC fried chicken chain, Pizza Hut outlets, Starbucks Coffee stores and burger chain Carl’s Jr helped the group profit margin rise to 17 percent from 15.5 percent a year earlier.
Total Group Sales were $185.7 million, up 5.8% on the previous half year, driven by a strong performance from KFC and increased contribution from the new Carl’s Jr. brand. Same store sales were up 4.9% for the half year (+2.9% 1H 2014) with solid same store sales growth from KFC, Pizza Hut and Starbucks Coffee.
Brand EBITDA was up $4.4 million to $31.6 million. The bulk of the increase came from KFC, but all four brands delivered an improved profit performance.
Directors have declared an interim dividend of 7.5 cents per ordinary share, up 1.0 cent on last year. The dividend is fully imputed and payable on 21 November 2014.
“As planned, the hard work in building internal efficiencies under last year’s pricing pressures has put the company in a good position to benefit from the sales improvements with better market conditions,” the company said. “This, together with some reductions in input costs, has produced a corresponding improvement in brand margins.”
Earnings at the company’s Starbucks chain jumped 46 percent to $2.1 million in the first half as sales increased 1.9 percent to $13.2 million. The coffee chain’s profit margin increased to 15.5 percent from 10.9 percent after it closed unprofitable stores and benefited from a higher New Zealand dollar and store efficiencies. The company had 26 stores at the end of the first half, two fewer than the year earlier.
Starbucks is expected to hold sales and margin at their current levels for the balance of the year, the company said.