Berjaya Food results dragged down by Kenny Rogers Roasters losses

Weak sentiment: Kenny Rogers Roasters is said to suffer losses in Malaysia as a result of weak consumer sentiment in the third quarter.

PETALING JAYA: Berjaya Food Bhd (BFood) said losses incurred by its Kenny Rogers Roasters restaurant chain in Malaysia continued to drag down its performance for the third quarter ended Jan 31, 2017 (Q3’17).

The company, which also owns the Starbucks franchise, said a higher write-down of fixed assets arising from the closure of certain non-performing restaurants had also weighed on the group’s earnings.

During the quarter in review, BFood saw its net profit falling 36.8% to RM4.7mil from RM7.4mil in the previous corresponding period despite registering higher revenue. Consequently, the group’s earnings per share (EPS) fell to 1.25 sen from 1.97 sen.

In Q3’17, BFood’s revenue increased 11% to RM163.5mil from RM147.3mil in the previous corresponding period, with pre-tax profit falling to RM8.62mil from RM11mil.

“The higher revenue was mainly due to additional cafes operating in the current quarter. The lower pre-tax profit as compared to the previous year’s corresponding quarter was mainly due to losses incurred by the Kenny Rogers Roasters operation in Malaysia as a result of the weak consumer sentiment in Malaysia, as well as the higher write-down of fixed assets arising from the closure of certain non-performing restaurants,” BFood said in its filings.

The group has proposed a third interim dividend of one sen per share, bringing the total proposed dividends to date to 2.5 sen per share.

For the cumulative nine-month period, BFood saw its net profit falling 25.4% to RM14.7mil from RM19.7mil in the previous corresponding period.

The group’s EPS fell to 3.91 sen from 5.25 sen, while its revenue increased 9.4% to RM454mil from RM415.1mil.

BFood said the group could be operating in a challening environment in the remaining quarter of its financial year ending April 30, 2017. This is because the further weakening of the ringgit could impact its gross profit margin.

“Nevertheless, the group expects Starbucks to maintain its revenue growth momentum, and the price adjustment in January 2017 is expected to mitigate the negative impact from the weakening ringgit,” BFood said.

Besides operating Starbucks in Malaysia and Brunei, and Kenny Rogers Roasters in Malaysia, Indonesia and Cambodia, BFood also owns Jollibean and various brands in Singapore.