Burger King reports big income growth
The fast food giant earned $48.2m in the second quarter to 30 June 2012, up from $30.2m in the same period last year. Revenue dropped 9% from $595.4m to $540.8m “due to refranchising transactions in the US and Canada and EMEA and an unfavourable foreign exchange impact”, but this was partially offset by comparable sales growth of 4.4%, as well as increased franchise and property revenues, the company said.
Burger King chief executive officer Bernardo Hees told investors: “We are pleased with our progress this quarter. Building on our momentum from the start of the year we delivered our second consecutive quarter of positive comparable sales at 4.4%. Adjusted EBITDA increased 19% on an organic basis, due to improved results in all our operation segments and both adjusted income and adjusted diluted earnings per share delivered double-digit growth.
“In addition we continued to gain traction in the execution of our core global business strategy. In the US, we have rolled out a host of initiatives across each of our four pillars – menu, marketing communications, image and operations. Internationally, we have established key master franchise joint ventures in Russia and China as part of our strategy to accelerate international development and we re-franchised over 36% of our global portfolio this quarter as part of our efforts to create a brand-focus, cash flow-generative franchise business.”
The US and Canada saw a 4.4% increase in comparable sales in Q2. Hees said this was “largely driven by the launch of our menu extension in April”, with the addition of smoothies, frappes, and wraps.
International sales also grew 4.4% overall, with 10.5% growth in Latin America and the Caribbean and 3.3% growth in Europe, the Middle East and Africa, driven by successful promotions in Germany. However, Hees said this was “still far from the potential we see in future years”.
Looking forward, Hees said the company would continue “enhancing the image and overall cost and experience of Burger King restaurants”, with the goal of re-imaging 40% of its US and Canada restaurants over the next four years. He added that the company would also continue to capitalise on growth opportunities abroad, through the formation of master franchise joint-venture deals in Russia and China.
