Fast food operator Restaurant Brands New Zealand Ltd. (RBD.NZ) said Thursday fiscal fourth-quarter sales were boosted by a "strong performance" from KFC, but added it plans to further write-down the value of its pizza business in Australia.

Restaurant Brands, which operates KFC, Pizza Hutt and Starbucks chains in New Zealand as well as some Pizza Hut stores in Australia, said in a statement that total sales for the 12 weeks to Feb. 27 increased by 2.8% on year to NZ$74 million.

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Both the KFC and Starbucks Coffee businesses experienced strong positive same-store sales growth over the quarter, the company said.

But the gains were cut by declining same-store sales at Pizza Hut in both Australia and New Zealand due to weaker demand, leading to Restaurant Brands' overall same-store sales being flat for the quarter at NZ$70.4 million.

Restaurant Brands said it expects its fiscal year profit after tax but excluding non-trading items to be "slightly less than that achieved in the prior year," noting that margins in both of its Pizza Hut businesses have been dented by "tighter trading conditions."

In the 2005 fiscal year, Restaurant Brands reported a profit after tax excluding non-trading items of NZ$11 million.

The fiscal year result will contain "further significant non-trading items" as the company lowers the value of its Australian Pizza Hut business in anticipation of continuing outlet sales, as well as "the provision for closure of a number of Pizza Hut New Zealand red roof restaurants at lease end."

In October last year, Restaurant Brands wrote-off NZ$2.9 million of goodwill on its Australian Pizza Hut business, which has been a disappointing performer since it was bought in 2002.

The company said fourth quarter same-store sales at the Australian business fell 11.2% on year to A$5.6 million due to an "increasingly competitive trading environment."

Restaurant Brands reiterated that it will continue disposing "underperforming" stores in Australia.

At the company's New Zealand pizza business, "continuing competitive pressures, a particularly warm summer and cannibalization from new store growth" dented sales in the fourth quarter.

The business' total sales of NZ$18.8 million were down 4.7%, while same store sales declined 8.4% during the quarter, the company said.

More positive sales performance was seen at Restaurant Brands' flagship KFC business, which makes up the bulk of its sales.

The company said KFC fourth-quarter sales rose 6.4% on year to NZ$41.9 million, and on a same-store basis sales increased by 5.4%.

The gains were attributed to the increasing positive impact of store "transformation," and a successful promotional calendar, the company said.

Restaurant Brands said Starbucks Coffee's fourth-quarter sales increased by 18% to NZ$7.1 million, and on a same store basis sales rose 2.8%.

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