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Burger King rebounds to post a profit

Burger King Holdings Inc. posted a profit Friday for the fourth quarter versus a loss a year earlier, fueled by strong late-night and breakfast sales and energetic promotional campaigns.
/ Source: The Associated Press

Burger King Holdings Inc. posted a profit Friday for the fourth quarter versus a loss a year earlier, fueled by strong late-night and breakfast sales and energetic promotional campaigns.

The results come as the world’s second largest hamburger chain completed its first year as a publicly traded company.

Burger King earned $36 million, or 26 cents per share, for the three months ended June 30 versus a loss of $10 million, or 8 cents per share, a year ago.

Sales rose 11 percent to $590 million from $533 million a year ago.

Burger King’s latest results include a $7 million charge related to the termination of its lease for a new headquarters, which the company had proposed to build in Coral Gables before deciding to stay in its current Miami location.

Last year’s fourth quarter results were hurt by a $30 million management termination fee related to its initial public offering in May 2006.

Analysts polled by Thomson Financial had expected an average of earnings of 27 cents per share on sales of $580.4 million. But the earnings estimates typically exclude one-time items.

For the fiscal year, net income increased to $148 million, or $1.08 per share, from $27 million, or 24 cents per share, in the previous year. Full-year revenue rose 9 percent to $2.23 billion from $2.05 billion a year ago.

During the quarter, Burger King said it was testing a new trans fat-free cooking oil blend that could be used in its restaurants by the end of the year. The company also decided to open its restaurants until midnight or later seven days a week — advertising the new hours in a campaign with hip-hop mogul Sean “Diddy” Combs.

Burger King said worldwide comparable sales were up 4.4 percent for the quarter and 3.4 percent for the fiscal year. It marked the 14th consecutive quarter of positive worldwide comparable sales growth.

“In the United States and Canada, fourth quarter sales were positively influenced by our breakfast and late-night” sales, which are growing faster than overall sales, Chief Executive John Chidsey said.

Revenue growth is also attributed to successful promotional campaigns involving the Transformers and Simpsons movies, and the popular children’s character SpongeBob SquarePants, Chidsey said.

Burger King opened 441 total restaurants in 2007, but closings worldwide resulted in a net of 154 new restaurants opened in the fiscal year. That fell short of Burger King’s previous forecast of about 200 net restaurant openings in 2007 due to delayed openings in Germany and the Middle East, and early closures of struggling restaurants in the United Kingdom.

The company paid down $125 million in debt in 2007, plus an additional $25 million retired after the fiscal year ended.

Worldwide average restaurant sales reached a record high of $1.19 million in 2007, a 6 percent increase from $1.13 million in the previous year.

For 2008, Chief Financial Officer Ben Wells said the company plans to use cash from operations to build and remodel more restaurants compared to past years.

Burger King operates more than 11,200 restaurants worldwide. About 90 percent of its restaurants are owned and operated by independent franchisees.