MIAMI Burger King Holdings Inc. blamed a stronger U.S. dollar, which led to unfavorable currency exchange rates, for much of its 10-percent drop in profit during its second quarter. The company also lowered its earnings forecast for the rest of its June-ending fiscal year.
The No. 2 burger brand’s top line remained strong, with new store openings and positive same-store sales driving a 3-percent revenue gain to $634 million. Corporate restaurant sales increased 6 percent to $473 million.
Same-store sales worldwide rose 2.9 percent in the quarter, and rose 1.9 percent in the United States and Canada. The net restaurant count for the quarter rose by 125 locations, up 19 percent from a year ago.
Burger King’s profit for the quarter ended Dec. 31 fell to $44 million, or 33 cents per share, from $49 million, or 36 cents per share, a year earlier.
Unfavorable and volatile currency exchange rates hit the global operations, the company said, negatively effecting per-share earnings by 5 cents.
“The complexity and rapidity in currency fluctuations during our second fiscal quarter, created by uncertainties in the currency markets, was difficult to forecast and anticipate,” Burger King chief executive John Chidsey said.
“Going forward, we expect earnings to continue to benefit from easing food and energy costs, expected sales lifts from new and recently re-imaged restaurants, net restaurant openings, product launches, and industry-leading marketing promotions,” he continued. “However, continuing uncertainties in the currency markets may continue to adversely impact earnings.”
Other global operators like Yum! Brands Inc. and McDonald’s Corp. also have warned of adverse affects from a stronger U.S. dollar, which reduces the value of foreign earnings.
The concerns led Burger King to trim its profit guidance for year. It now expects to earn between $1.44 and $1.49 per share in 2009, which includes a 10-cents-per-share hit from currency exchange rates. Previous projections had called for earnings between $1.54 and $1.59 per share. In fiscal 2008, Burger King posted earnings of $1.38 per share.
Burger King, which on Wednesday introduced mini burgers and breakfast sandwiches, said it planned to expand the number of restaurants that operate 24 hours a day to help grow its snack sales.
Burger King operates or franchises more than 11,700 restaurants worldwide.
Contact Ron Ruggless at [email protected].