Burger Fuel: Running on empty

Listed Franchisor Burger Fuel Worldwide [BFW.NZ] results out yesterday were disappointing for shareholders.

Back in September 2007 directors anticipated NZ$50,000.00 in losses per month but losses of NZ$669,000 in the six months to 30 September 2008 were more than double that figure.

Even more worrying, losses have mounted as 2008 continued. If you strip out 2007 IPO costs the losses for the 9.5 months to 31 March 2008 were $83,578.00 per month. This compares to $111,500.00 per month for this latest reporting period.

Hardly a positive trend.

Lets look at revenue for the company to see if that changes the picture.

Surely if losses are more than double company estimates then revenue should be sharply up when we compare the 30 September 2008 revenue with the previous 3.5 month period in 2007?

Yes it is but sadly not more than double.





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With revenue of $3,518,000 in the six months to 30 September 2008 and $ 2,336,000 for the 6 months to 30 September 2007, it is quite a good lift but hardly the stellar stuff that was shouted from Burger Fuel's advertising pre IPO, because it shows costs have far outstripped income and as I pointed out above these costs appear to be increasing rather than abating.

These revenue figures are based on 4 more stores since listing so this makes income figures look even worse.

Burger Fuel management say the next six months will be about cost containment and they will not anticipate opening any new outlets until well into 2009.

This will clearly be important to stem the franchisors already increasing operating expenses as their franchisees come under pressure from increasing business costs such as labour, ingredients and energy.

Like its bigger listed cousin Restaurant Brands Ltd [RBD.NZ] who had a recent poor last quarter sales, Burger Fuel will continue to struggle in the face of increasing competition, fickle consumer tastes and demands for better service and quality fast food.

Its short company history as a listed vehicle have been wildly disappointing and it looks even further away from any tangible success than it was when it listed mid 2007.

As least there is still their bastard Burger.

Burger Fuel shares were at 38c at close of the NZX at 5.00pm Tuesday 9 December 2008.




c Share Investor 2008

Mr Conservative

Alan Bollard is inherently conservative and has only ever acted re-actively in his position as Reserve Bank Governor.

The current economic climate, unlike the weather, is melting down and this should lay heavy on his mind.

One might say that he saw all this turmoil coming and left himself alot of room to move interest rate downwards when really needed but I do not credit him with that much foresight-hey he works in a government department how talented can he be?

Like tax cuts, lower interest rates stimulate economic activity, simply because they leave more money in consumers pockets and even though inflation is supposed to be his only target wee Alan should have been cognisant of a failing economy for some time.

Economic pundits have dangled cuts of anything between 1-2% and I myself would contend that 2% would be the more appropriate figure, in fact I have argued for a year that he needed to move downwards.

Given Bollards track record of blind conservatism though it would be a surprise to the market if he picked a rate close to 2%.

I dont buy lotto tickets (I only in markets!) but I am going to stick my neck out and pick a 1.25% cut at 9.00am this morning (NZ Time)

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c Share Investor 2008

Its only a Billion after all

News earlier this week that Labour kept secret the billion dollar hole that ACC has dug for itself should be no shock to the voting population.

The outgoing Labour government left behind a $1 billion hole in the ACC budget which will have to be filled, Prime Minister John Key said today.

Briefings from ACC officials said the corporation was seeking $297 million more for the current 2007/2008 year and similar figures for coming years  NZ Herald

They lied, cheated and manipulated their way through this election year hoping nobody would see through it so why would a measly 1 billion bucks down the toilet be any different?

A billion dollar hole wrought by a wasteful government department who hounds business without care or due diligence and has an attitude to taxpayer money that allows them to spend it on beauty care for employees pets is a department way out of control. The billion dollar hole proves that.

For Labour to try to avert attention away from their failure by saying National are crying wolf merely to put ACC up for sale is more of the same failed policy,misdirection and conspiracy theory finger pointing that left them losing big time on November the 8.

This sort of banal nonsense may have some traction when you are in Government but when you are in opposition it just looks like the ramblings of a bitter disorganised bunch of lefties ready for the knackers yard.

Just to show the party has learnt nothing from their election day loss David Parker, spokes weasel for ACC said this today:

"we left this incoming Government with a fantastic set of books... the billion dollars is only 5% of ACCs operating budget..."  Radiolive 6-9.00am

What planet is Parker living on and does he know he is opposition now?

Arrogant and ignorant to the end.

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c Political Animal 2008

Never mind the length, look at the volume

If you are one of those nervous nellies you probably shouldn't be reading this blog because I haven't lost interest in the stockmarket as some have in the NZX.

In fact I am more interested than when the market was going up over the last 5 years-it is more exciting when there are bargains to be had!

Most of the big overseas investors have retrenched and sold while the NZ dollar was higher and most Mum and Dad investors seem to have sat on their shares and the NZX is now operating on a mere trickle of volume where wild swings and achy hearts are the order of the day.

We only have die-hards like myself making the odd trade and during some days in November there were as few as 2000 trades .

We all know that the New Zealand Stockmarket operates on small volumes by comparison to overseas markets, but the very low volumes traded over the last month or so are an indicator that those that are left in the market want to stay and conversely those that have left are not ready to take what they see as risk and get back into a market they presumably think has further to fall.

They are probably right.

Watch though when things in the economy start to improve and news media releases are of a more positive nature the volume of shares traded will begin trending up and that is when a sustained improvement in the market is likely.

Until then the current trickle of trades on the NZX is largely a lack of interest rather than any sort of market meltdown, as is the case with the current high volumes traded on the NYSE .

Keep a look out for any significant and sustained volume increases for a more meaningful indication of the mood of the market.

Positive, and indeed, negative.


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c Share Investor 2008