Eagle Boys bites into RBD profit

By Phil Boeyen, ShareChat Business News Editor

Wednesday 17th January 2001

Costs relating to the acquisition and rationalisation of the Eagle Boys pizza chain are behind an almost 25% drop in profit for fast food company Restaurant Brands (NZSE: RBD).

The company has reported a full year profit of $9.8 million to the end of November 2000 compared with $13 million in 1999. Sales revenue grew to $234 million from $215 million.

Net profit after tax excluding abnormal items was $12.6 million, compared to $13.0 million last year. The abnormal item was a $2.8 million after tax charge for costs associated with Eagle Boys.

Pizza Hut trading profit after tax also fell $700,000 for the year due to disruption of the business during the four-month integration of the 53-store Eagle Boys chain, which the company bought in May last year.

However RBD says by year end, with the integration process complete, margins were close to pre-acquisition levels.

It says Pizza Hut is now market leader in the growing home delivery and takeaway pizza sector with estimated market share of 65%, and has a strong base to introduce a wider range of products.

"Home delivery of beer and wine will be rolled out nationally in 2001 following successful testing in 2000. This will be a world first for Pizza Hut. A range of energy drinks, confectionery, snacks and ice cream will also be launched after successful testing," the company says.

The company's other fast food brands - KFC and Starbucks - have continued to perform steadily.

KFC's earnings before interest, tax, depreciation and amortisation was a record $36.3 million, up 4.4% on 1999, and the plans for the year ahead are based around revitalising the brand by launching chicken burger and snack products. Two new KFC stores will be opened in 2001.

Starbucks Coffee has reported strong same-store sales growth and RBD says it believes that the growth in the cafe sector in recent years will continue. The rollout of Starbucks Coffee will accelerate with 13 stores expected to open this year.

Restaurant Brands has announced 5.5 cents per share dividend, fully imputed, which brings the year's total dividend to 10 cents. Given a one-for-twelve bonus issue in March last year the company says the year's dividend represents an 8% increase over 1999.

The company has also announced it will be setting up a dividend reinvestment plan for shareholders, and plans to change its year-end balance date from November 30 to February 28 to allow year end activity to take place during quieter post holiday trading.

The company also notes that the 2000 financial statements have been prepared on a 53-week basis while previous results are based on a 52-week year.

"Because the company normally uses a 52 week (364 day) year, a "leap" year is occasionally required," it says.

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