Burger King profit falls, 2009 forecast is cut
NEW YORK -- Burger King, based in Miami, missed analysts' profit expectations by 4 cents a share mainly because of the effect of the stronger dollar.
Companies with global operations translate sales and franchise revenue from foreign currencies into dollars. That can boost revenue and profit when the dollar is weaker but hurt results when the U.S. currency is stronger because foreign sales then translate into fewer dollars.
Chief Executive John Chidsey said on a conference call with investors that the exchange rate hit "was more than we forecast or could have anticipated."
The company said translating foreign currencies into dollars hurt profit by 5 cents per share in the quarter, which ended Dec. 31. The company earned $44 million, or 33 cents a share, compared with $49 million, or 36 cents a year earlier.
The stronger dollar has affected a number of restaurant chains with big businesses overseas. Both McDonald's and Yum Brands, which operates KFC, Pizza Hut and Taco Bell, have said exchange rates hurt their most recent results.
Burger King chopped its profit guidance for the year because of the dollar's strength.
The company now expects to earn between $1.44 and $1.49 per share in 2009, down from $1.54 to $1.59 per share. Analysts expect $1.52 per share. The new estimate assumes currency rates will strip 10 cents a share out of profit during the year.
Costs for food, particularly beef, also rose from a year earlier. Beef costs jumped 13%, Chief Financial Officer Ben Wells said.
Although currency rates and higher food costs have cut into profit, sales have kept growing despite the deepening recession — or perhaps because of it.
Revenue rose 3% to $634 million from $613 million, though that number was shy of Wall Street's estimates due partly to foreign-currency translations. Same-store sales, or sales at locations open at least a year, rose 2.9% worldwide and 1.9% in the U.S. and Canada.