October 28, 2013 / 12:46 PM / 5 years ago

Burger King profit beats as franchising slashes costs

(Reuters) - Burger King Worldwide Inc BKW.N reported a better-than-expected third-quarter profit as it slashed costs by franchising more outlets and sales grew outside North America.

An employee prepares a food order on the opening day of the Burger King restaurant at the Marignane airport hall December 22, 2012. REUTERS/Jean-Paul Pelissier

The third-largest U.S. hamburger chain, behind McDonald’s Corp (MCD.N) and Wendy’s Co (WEN.O), said expenses fell about 90 percent, mainly because it refranchised more than 500 restaurants in the past year.

With almost all of its restaurants now franchised, total sales fell about 40 percent to $275.1 million.

Burger King shares, which have rise about 24 percent this year, rose 3 percent to $20.32 in premarket trading on Monday.

Global sales at established restaurants rose 0.9 percent in the quarter ended September 30, well short of the average analyst estimate of 1.9 percent.

Same-restaurant sales in United States and Canada, where the company last month introduced lower-fat “Satisfries” french fries to offer healthier alternatives, fell 0.3 percent.

Burger King’s same-store sales growth matched that of McDonald’s Corp (MCD.N), which reported last week and warned that global sales would be relatively flat in October because of stiff competition and a weak economic recovery.

Burger King reported a 2.4 percent rise in sales in its Europe, Middle East and Africa business, helped by cheaper prices and online coupons in Germany and Spain.

In Asia Pacific, sales rose 3.7 percent.

Burger King’s net profit rose to $68.2 million, or 19 cents per share, from $6.6 million, or 2 cents per share, a year earlier.

On an adjusted basis, it earned 23 cents per share, topping the average analyst estimate of 21 cents, according to Thomson Reuters I/B/E/S.

Revenue fell about 40 percent to $275.1 million.

Burger King also raised its quarterly dividend to 7 cents per share from 6 cents.

Reporting by Aditi Shrivastava; Editing by Kirti Pandey and Saumyadeb Chakrabarty

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