QSR 3Q earnings fall 10.5% to RM22.6m on inflationary pressures

KUALA LUMPUR (Nov 25): QSR BRANDS BHD []’s earnings fell 10.5% to RM22.22 million in the third quarter ended Sept 30 from RM25.33 million a year ago, as its margins were affected by inflationary pressures including commodity costs.

It said on Friday that its revenue increased 10% to RM821.49 million from RM746.49 million while earnings per share were 8.13 sen versus 9.22 sen.

However, profit before tax fell 10.1% to RM 58.50 million from RM65.10 million a year ago in the previous year corresponding quarter.

“The group continued to achieve commendable sales growth amid a challenging economic environment. All business segments continued to be subjected to inflationary pressures with higher supplies costs, commodity costs and energy costs,” it said.

“The group’s investments in KFC India and KFCH International College continue to incur initial start-up loss before they achieve critical mass of operations. As for KFC Cambodia, the loss for the quarter reduced on the back of substantially higher revenue,” it said.

For the nine-month period, its earnings shed 0.7% to RM74.41 million from RM74.91 million in the previous corresponding period while revenue increased by 10% to RM2.426 billion from RM2.204 billion.

Commenting on the Pizza Hut Restaurants segment, it said the Malaysia operations recorded a 6.1% increase in revenue to RM316.60 million (2010: RM298.40 million) while profit before tax was relatively unchanged at RM37.0 million (2010: RM 36.20 million).

“Although turnover posted a moderate growth, profit was affected by inflationary cost pressures arising from higher food cost, labour cost and energy cost,” it said.

On the Singapore operations, QSR said revenue increased by 13.5% to RM142.10 million (2010: RM125.20 million) and profit increased by 96.4 % to RM 5.5 million (2010: RM2.8 million).

On the KFC restaurants, it said for the Cambodia operations, revenue rose by 4.8% to RM8.7 million (2010: RM8.3 million) but loss increased to RM3.90 million (2010: RM 2.9 million).

There were 10 restaurants as at end September 2011 with no new openings during the period under review. The dismal result was affected by Cambodia’s weak economy but this is however showing signs of recovery.

“The menu was also revamped by offering products that suit local demands and it is showing encouraging results that will contribute positively to earnings,” it said.

On the KFC Holdings (Malaysia) Bhd group, it said its revenue rose 10.5% to RM2.032 billion from RM 1.838 billion in the previous corresponding period. However, it posted a lower profit before tax of RM154.50 million in the cumulative quarters compared with RM158.40 million a year ago.

“Whilst the group recorded a respectable revenue growth, its profitability was affected by cost pressures arising from higher restaurants’ supplies costs, labour costs and energy costs and was also affected by the initial years start-up loss incurred by KFC India and the KFCH International College,” it said.