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Tim Hortons Q4 earnings plunge 73%

Last updated: 01:01 24 Feb 2012 AEDT, First published: 02:01 24 Feb 2012 AEDT

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Tim Hortons (TSE:THI)(NYSE:THI) said Thursday its fourth quarter profits fell nearly 73 percent as it recorded a massive gain a year ago on the sale of its interest in the Maidstone Bakeries brand.

For the three months ended January 1, the coffee and baked goods giant posted net earnings of $102.95 million, or $0.65 per share, down 72.7 percent from $377.12 million, or $2.19 per share, a year ago.

In the fourth quarter of 2010, the company recorded a $361.08 million gain on the sale of its interest in the bakery chain - a boost to earnings that wasn't there this year.

Revenues, however, rose 21.2 percent to $779.79 million, from $643.50 million in the same period last year.

According to Thomson Reuters, analysts had anticipated fourth quarter profits of 62-cents per share, on $736 million in sales.

Tim Hortons president and CEO, Paul House commented: "Our disciplined focus on responding to our guests' needs, evolving our business and executing our growth strategies resulted in great momentum in the fourth quarter and a strong finish to the year.

"We are pleased with our system's performance in persistently challenging operating conditions throughout 2011 and believe we have created a strong foundation on which we will continue to build."

In Canada, where the company pulls a strong, loyal following, revenues rose 19.1 percent to $649.56 million, on increases in average cheque, and a strong 5.5 percent increase in same store sales, or those locations open at least one year.

In the U.S., where Tim Hortons is focused on brand differentiation and awareness, revenues rose 51.9 percent to $48.2 million. Same store sales rose 7.2 percent, as average cheque increased.

Overall, sales rose 25.4 percent during the quarter, to $548.1 million, while total franchise revenues increased 12.1 percent to $231.6 million. Franchise rents and royalties increased 9.6 percent to 191.04 million, while franchise fees hiked 25.6 percent to $40.6 million.

Looking forward, Tim Hortons said it anticipates earnings for the full year fiscal 2012 to be in the range of $2.65 to $2.75 per share. Same store sales are expected to grow between three and five percent in Canada, and between four and six percent in the U.S.

House continued: "Our 'More than a Great Brand' strategic plan is designed to deliver innovation to our guests, build upon our clear market leadership position and enable us to pursue new avenues of growth.

"In 2012, we will continue to invest in a focused manner to differentiate our business and deliver shareholder value."

In other news, Tim Hortons said its board of directors has approved a 23.5 percent increase to its quarterly dividend, to $0.21 per share. This dividend is payable on March 20, to shareholders on record as of March 5.

The company also announced a new $200 million share repurchase program, which is not to exceed 13.67 million shares, or ten percent of its common stock. The buy backs are set to commence on March 5, and end one year later.

After gaining 1.09 percent in morning trading, shares of the Oakville, Ontario-based company hiked another 2.72 percent to $52.06, as of 9:48 am EDT.

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