Thursday, April 26, 2007

Restaurant Brands FY 2007 Analysis

A $3.6 M loss and a cut in the dividend of 2.5c No surprises there.

Accentuating the less negative and burying all the really negative stuff: big losses, increased running costs, a $70m increase in borrowing and continued capex on KFC.

The biggest worry that RBD have is with KFC. They are struggling with sales, dollar wise and quantity of chicken product sold while at the same time the "transformation" that management keep talking about is going to cost around 60M, with only 25% of refurbishments done and 15M already spent. The big problem with this is that they seem destined to repeat the same updates to stores in 7 or so years time, as they have done 7 years previously.

The rest of today's announcement is really a case of the same old crap but a different reporting day and isn't worth commenting on save the same old mantra that I keep repeating that it is service and I would have to say now(didn't used to be)food quality at KFC and PH that is hurting RBDs sales and bottom line. That is once again missing from managements spin.

We have also heard today a comment about "...whether we will sell the company..." will be announced to the market in about a week. That position has changed somewhat over the last couple of weeks when management announced "...we are talking to several interested parties..."

Today's language seems a spin spun because any "interested parties" have probably lost interest and the comment looks better for management as it perhaps shows that they had some control over any sale when the facts show that the company just ain't a buy.

Sell on the next profit rise.

c Share Investor 2007