Mar 2017 Financial News

Prestige Holdings profits down by 21%

Mar 01, 2017

Prestige Holdings reported a 21 per cent decline in its after-tax profits and a two per cent increase in its revenue for its 2016 financial year, as the restaurant management company opened seven new restaurants in T&T last year.

In consolidated audited results for the 12-month period ending November 30, 2016 published on Saturday, Prestige Holdings chairman Christian Mouttet said the company experienced “relatively consistent sales performance for most brands” throughout the period December 1, 2015 to November 30, 2016 but its profitability “while positive in the first half, declined in the second six-month period.”

Prestige Holdings added Starbucks last year to its four other American franchises—KFC, Pizza Hut, TGI Fridays and Subway.

According to Mouttet: “This decline was driven by three main factors:pre-opening and other costs associated with the establishment of the Starbucks brand; higher costs as a result of the movement of the exchange rate; and higher food costs due to an increase in commodity food prices.”

He explained that the Starbucks start-up costs totalled $3.5 million, but were a non-recurring item.

But, he noted: “The foreign exchange issue, both rate and availability, as well as the higher costs of inputs, are expected to be ongoing and the management is implementing various strategies for dealing with these.”

On the issue of the foreign exchange rate and availability, Mouttet said: “To varying degrees, all of our brands are experiencing the effects of the difficult economic environment, the depreciating currency and the difficulty in obtaining foreign exchange.

“Additionally, higher food costs and a difficult labour market are having a negative impact.”

The Prestige Holdings chairman said the company also reduced some of its long-term debt as part of strategies to deal with the declining currency and higher food costs.

The restaurant management company said it planned to open three new Starbucks restaurant in the 2017 financial year to add to the three it opened last year, between April and November, in SouthPark in San Fernando, MovieTowne in Port-of-Spain and Endeavour in Chaguanas.

Mouttet said: “The brand has been well accepted by the local market, aided by strong customer awareness for the Starbucks brand and its high-quality beverage and food offerings.

He said that Prestige Holdings “expects that “Starbucks will become a meaningful and positive contributor to the Prestige group over the medium to long term.”

Apart from the three Starbucks the company opened last year, Prestige Holdings opened two new KFCs, one Pizza Hut and one Subway.

It also completed one re-imaging and one relocation, ending 2016 with 119 restaurants up from 112 in 2015.

Reflecting on the company’s outlook for 2017, Mouttet said the company expects the economic environment to remain challenging and, as a result, Prestige Holdings is “implementing initiatives to address the higher costs of inputs and the depreciating exchange rate, both of which are impacting our overall profitability, and expect to see the effects of this as 2017 progresses.”

In his chairman’s report, Mouttet paid tribute to Joseph Esau, who retired from the Prestige Holdings board last year, after serving 19 years as a director, including 15 as chairman of the company.

“Over those years, Joe provided sterling leadership, strong guidance and wise counsel to both the board and management. His contribution to the board was immense and wide ranging.”

Source:
Trinidad Guardian
Sunday February 26, 2017

http://www.guardian.co.tt/business/2017-02-26/prestige-holdings-profits-down-21