Burger King 3Q earnings climb, costs fall
MIAMI (AP) — Burger King’s third-quarter net income surged as it sharply reduced its restaurant expenses mostly due to the refranchising of company-owned restaurants and continued to grow overseas.
The Miami company’s performance topped analysts’ estimates. It also raised its quarterly dividend.
Shares rose in premarket trading.
Burger King Worldwide Inc. has been revamping its business since it was purchased in 2010 by 3G Capital, a private investment firm run by Brazilian billionaires. The company has been selling more restaurants to franchisees in a bid to reduce overhead costs. Instead of booking sales from those restaurants, Burger King collects franchise fees.
For the three months ended Sept. 30, the hamburger chain earned $68.2 million, or 19 cents per share. A year earlier it earned $6.6 million, or 2 cents per share.
Excluding certain items, earnings were 23 cents per share. Analysts polled by FactSet expected earnings of 21 cents per share.
Restaurant expenses dropped to $22.9 million from $216.3 million. Burger King also managed to lower significantly its selling, general and administrative expenses and other operating expenses.
Revenue declined 40 percent to $275.1 million from $455.7 million mostly due to the refranchising of 519 company-owned restaurants. But it still managed to beat Wall Street’s forecast of $264.5 million.
Stripping out the impact of the refranchising and foreign currency fluctuations, revenue rose 8.1 percent.
Sales at restaurants open at least a year, including both company-owned and franchised locations, rose 0.9 percent. This figure is a key indicator of a restaurant operator’s health because it excludes results from locations recently opened or closed.
The strongest performance was in the Asia Pacific region, which posted a 3.7 percent rise in the metric. Latin America and the Caribbean and Europe, the Middle East and Africa also reported improved sales.
There was some softness in the U.S. and Canada though, with sales at restaurants open at least a year dipping 0.3 percent. This was due to tightened consumer spending and ongoing competition.
Burger King boosted its quarterly dividend to 7 cents per share from 6 cents per share. The dividend will be paid on Nov. 26 to shareholders of record on Nov. 12.
The company, founded in 1954, has more than 13,000 restaurants in 91 countries and territories worldwide.
Its stock gained 54 cents, or 2.7 percent, to $20.30 in premarket trading about an hour before the market open.