New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Restaurant Brands (RBD) has released a disappointing 1H23 result which was below our and consensus expectations. Key negatives included (1) significant ingredient cost inflation impacting EBITDA margins, particularly in the core NZ market, (2) difficulty raising prices without impacting sales volume as consumers appear to be more price-sensitive across all markets, and (3) higher expenses across non-operating items including depreciation and interest.</li><li>RBD reiterated its FY23 NPAT guidance range of NZ$12m to NZ$16m, implying a significant uplift in 2H23 profitability is required to meet guidance.</li><li>Our FY23 NPAT forecast is ~NZ$10m. This reflects our view that challenging macro-economic conditions and cost pressures are likely to persist over the next six months. </li></ul>

Restaurant Brands (RBD) has released a disappointing 1H23 result which was below our and consensus expectations. Key negatives included (1) significant ingredient cost inflation impacting EBITDA margins, particularly in the core NZ market, (2) difficulty raising prices without impacting sales volume as consumers appear to be more price-sensitive across all markets, and (3) higher expenses across non-operating items including depreciation and interest.RBD reiterated its FY23 NPAT guidance range of NZ$12m to NZ$16m, implying a significant uplift in 2H23 profitability is required to meet guidance.Our FY23 NPAT forecast is ~NZ$10m. This reflects our view that challenging macro-economic conditions and cost pressures are likely to persist over the next six months. 

Restaurant Brands NZ - 1H23 Result — From Sizzle to Fizzle

<ul><li>We downgrade Restaurant Brands (RBD) to UNDERPERFORM from NEUTRAL.</li><li>This primarily reflects (1) limited ability to pass through price increases from this point without risking competitiveness versus peers, (2) slowing demand in US divisions with conditions likely to persist in the near-term, (3) adverse macro-economic conditions highlighting the risk of slowing demand in Australia and New Zealand, and (4) NZ supply contract re-negotiations suggesting reduced bargaining power in RBD's core NZ market. </li><li>RBD's updated FY23 NPAT guidance range is now between NZ$12m to NZ$16m. </li></ul>

We downgrade Restaurant Brands (RBD) to UNDERPERFORM from NEUTRAL.This primarily reflects (1) limited ability to pass through price increases from this point without risking competitiveness versus peers, (2) slowing demand in US divisions with conditions likely to persist in the near-term, (3) adverse macro-economic conditions highlighting the risk of slowing demand in Australia and New Zealand, and (4) NZ supply contract re-negotiations suggesting reduced bargaining power in RBD's core NZ market. RBD's updated FY23 NPAT guidance range is now between NZ$12m to NZ$16m. 

Restaurant Brands NZ - Double Down(Grade) Hard to Swallow

<ul><li>Restaurant Brands (RBD) provided disappointing full year guidance at its annual shareholder meeting.</li><li>Reported NPAT is now expected to be "in the vicinity" of FY22's ~NZ$32m, versus initial consensus expectations of ~+22% year on year growth.</li><li>Management expects EBITDA margins will improve in FY23, particularly in the second half, but cost pressures (at the overhead and funding cost lines) remain the key driver of subdued net profit growth.</li></ul>

Restaurant Brands (RBD) provided disappointing full year guidance at its annual shareholder meeting.Reported NPAT is now expected to be "in the vicinity" of FY22's ~NZ$32m, versus initial consensus expectations of ~+22% year on year growth.Management expects EBITDA margins will improve in FY23, particularly in the second half, but cost pressures (at the overhead and funding cost lines) remain the key driver of subdued net profit growth.

Restaurant Brands NZ: Coming Under Pressure

<ul><li>Robust 1Q23 store sales supported by favourable currency movements: Total NZD sales growth was positive across all regions, but this included significant contribution from favourable currency movements</li><li>Divisional weakness mostly isolated to California: California continues to be RBD's weakest division, with same store sales ~-4% lower than the prior period</li><li>New Zealand, Australia, and Hawaii still exhibiting positive same store sales: New Zealand (+7% against 1Q22), Australia (+11%), and Hawaii (+1%) same store sales remain in positive territory</li></ul>

Robust 1Q23 store sales supported by favourable currency movements: Total NZD sales growth was positive across all regions, but this included significant contribution from favourable currency movementsDivisional weakness mostly isolated to California: California continues to be RBD's weakest division, with same store sales ~-4% lower than the prior periodNew Zealand, Australia, and Hawaii still exhibiting positive same store sales: New Zealand (+7% against 1Q22), Australia (+11%), and Hawaii (+1%) same store sales remain in positive territory

Restaurant Brands NZ: 1Q23 — Sales Takeaway

<ul><li>Restaurant Brands (RBD) has reported a solid 1Q23 update with group sales of NZ$308.6m (+12% versus prior period).</li><li>This period cycled COVID related headwinds in ANZ (staffing shortages and lower operating hours due to Omicron) in the prior year, and was supported by favourable currency movements.</li><li>RBD highlights that inflation pressures continue, but at a lower rate.</li></ul>

Restaurant Brands (RBD) has reported a solid 1Q23 update with group sales of NZ$308.6m (+12% versus prior period).This period cycled COVID related headwinds in ANZ (staffing shortages and lower operating hours due to Omicron) in the prior year, and was supported by favourable currency movements.RBD highlights that inflation pressures continue, but at a lower rate.

Restaurant Brands (RBD): 1Q23 Update – Initial Impressions

New Zealand

Restaurant Brands New Zealand Limited operates fast food restaurant chains in New Zealand & Australia. The Company operates close to 300 stores which operate under the KFC, Pizza Hut and Starbucks restaurant names.

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Restaurant Brands NZ (RBD NZ)

Restaurant Brands NZ - 1H23 Result — From Sizzle to Fizzle

RBD reiterated its FY23 NPAT guidance range of NZ$12m to NZ$16m, implying a significant uplift in 2H23 profitability is required to meet guidance.

Forsyth Barr

Restaurant Brands NZ - Double Down(Grade) Hard to Swallow

This primarily reflects (1) limited ability to pass through price increases from this point without risking competitiveness versus peers

Forsyth Barr

Restaurant Brands NZ: Coming Under Pressure

Restaurant Brands (RBD) provided disappointing full year guidance at its annual shareholder meeting; Reported NPAT is now expected to be "in the...

Forsyth Barr

Restaurant Brands NZ: 1Q23 — Sales Takeaway

Restaurant Brands' (RBD) 1Q23 trading update demonstrates solid performance, with store revenue up +12% versus 1Q22, which is broadly in line with...

Forsyth Barr

Restaurant Brands (RBD): 1Q23 Update – Initial Impressions

Restaurant Brands reports strong 1Q23 update with group sales of NZ$308.6m (+12%) despite COVID-related headwinds in ANZ (staffing shortages and...

Forsyth Barr

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