Oct. 8, 2003
NEW ZEALAND — Despite a half-year net profit drop of nearly 15 percent, to $4.3 million, the market pushed the stock price of Restaurant Brands -- owner of New Zealand's Pizza Hut, KFC and Starbucks Coffee brands -- up 4 percent to close at $1.30 on Oct. 9.
Acting chief executive Vicki Salmon credited the rise in share price to a September profit warning, according to a report in the New Zealand Herald.
The company's main problem was with KFC, whose first-half sales dropped 1.6 per cent to $94.3 million. However, the company said the brand was trending slowly upwards from its 6.5 per cent decline in last year's fourth quarter.
Pizza Hut New Zealand produced good results despite increased competition in Wellington from new entrant Domino's.
Sales of $44.9 million were up 9.1 per cent compared to the previous year and up 7.6 per cent on a same-store basis.
Pizza Hut has been undercutting Domino's prices and increased its marketing budget in response to the competition, but Salmon said the threat was small.
Domino's have six stores compared to Pizza Hut's 90 and "I think they're finding it a bit difficult," said Salmon.
Macquarie Equities analyst Warren Doak agreed. "It's tough for Domino's. Restaurant Brands, despite their faults, understand the pizza business."
Restaurant Brands has previously produced surveys showing its 0800 number is the third best-known number behind the emergency number and Telecom directories, according to the Herald report.
The company also said it expects to appoint a new chief executive as soon as next month.