You might think that since Burger Fuel Worldwide Ltd [BFW.NZX] have made a maiden profit of just under $34,000.00 in the year to March 31 2011 after 4 years of trying and millions spent getting there that I would be starting to sing the company's praises from the roof-tops but I am still pretty damb negative even after their first result with black ink.
Lets have a look at some of the key figures:
Profit of $33,513.00 up on last years $552,983.00 loss.
Revenue of $8.326 million down on last years $8.722 million
Middle East stores performing well.
$1,213,785 in cash & no debt.
On first look and if you ignore that it took 4 years to get here, the signs look OK.
Heres the fly on the burger bun though, while the losses have been pared back by more than half a million that has been done by cost cutting rather than an improvement in the operation of the business and in absence of revenue growth, the company, who is a franshisor and gets it revenue from a portion of sales from franchisees, continues to put the focus in its profit releases on how much sales at their franchisees stores have increased rather than focusing on the bottom-line at the parent company.
Fine, revenue is supposed to increase as sales at its franchisees stores grow but we just haven't seen this yet and investors need to know just when the current $8.2 million odd is going to be translated into a decent sustained profit.
Management are very bullish about expansion in the Middle East but investors should note that we have seen this kind of exuberance before - in terms of bullish growth projections in Australasia pre-IPO - and it has turned into nothing but broken promises.
We need to see some good sustained profits before I can give this company a pass mark.
4 out of 10.
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