Tuesday, April 29, 2008

Prestige Holdings loses $7.3 million

Published: April 29, 2008

Prestige Holdings Ltd has declared an after tax loss of $7.3 million (actually $7,344,000) for the first quarter ending February 2008.

The company has also sold off its loss-making businesses in Puerto Rico.

Prestige Holdings Ltd is the parent company of a number of well-known restaurant chains, including Kentucky Fried Chicken (KFC), Pizza Hut, TGI Friday’s and Long John Silver’s.

The first quarter loss was fully anticipated. In published accounts, chairman Joseph Esau said the group expected a fall in earnings due to its losses in Puerto Rico and “initial cost challenges” in the TGI Friday’s business in Barbados as well as “higher than expected” inflation in T&T.

Esau said group sales increased by 18 per cent to $176.4 million, and profit after tax declined by 24 per cent to $5.5 million excluding the Puerto Rico operations, compared with the first quarter last year. Esau said after mounting losses and a poor business outlook, Prestige Holdings decided to shut down its businesses in Puerto Rico.

Esau said that because of “worsening economic conditions” and expert opinion that the island was headed for a “protracted recession,” the board “decided not to consumate a new proposed joint venture and to get out of Puerto Rico in order to concentrate on developing the company’s other viable businesses.

The Puerto Rico businesses along with what the statement said were ‘significant obligations” were sold to Victor E Mouttet Limited, parent company of Prestige Holdings Limited, at a nominal price of US$100.

Esau said the decision was taken in the absence of the Victor E Mouttet representative on the Prestige Holdings board, who declared his interest in the transaction and left the meeting which was held on April 23.

In the process, Prestige Holdings Limited will take a loss of $6.1 million.

The company said it entered the Puerto Rican market in 2004.

Commenting on the T&T operations of Prestige Holdings Limited, Esau said the labour shortage in the country continues to be a major problem, especially during peak periods. He said this was a “constraint on sales levels.” He also said that inflation had had a “negative impact” on earnings for the quarter.

Despite this, Esau said the group had “achieved reasonable top line growth in all brands, particularly KFC and Pizza Hut.” He added that the company had increased prices “judiciously” to compensate for higher food prices and expected improved performance in the second quarter.

Esau said Prestige Holdings’ businesses in the Dominican Republic and Jamaica are producing profits while the TGI Friday’s restaurant in Barbados is still experiencing supply chain and other cost challenges.

Trinidad Guardian Newspapers

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