Covid19 drags Prestige Holdings' Q2 profits down 257%

Not even KFC could withstand the impact of covid19. Prestige Holdings Ltd – the local franchise holder for KFC, Pizza Hut, Subway, Starbucks and TGI Friday’s – posted an $8 million after-tax half-year loss for the period ending May 31, or down 150 per cent year-on-year. The loss was primarily attributed to covid19 but the company noted part of its loss had to do with a change in accounting reporting practices, specifically IFRS 16, which deals with the value of leases.

The second quarter results highlight the harsh reality of the national shutdown caused by the covid19 pandemic, PHL’s chairman Christian Mouttet said in his report for the company’s unaudited financial statements for the first six months of the 2020 financial year. During the second quarter, which consisted of 92 days, all PHL restaurants were closed for 34 days, and open only for carry-out and delivery for 42 days

For the half-year 2020, revenue decreased by 20 per cent to $428 million. Profits fell from $15.99 million in 2019 to a loss of $7.99 million in 2020. For the second quarter (three months ended May 31), however, which would have encompassed the bulk of the national lockdown, the company’s earnings fell 257 per cent, from a profit of $10.3 million in 2019 to a loss of $16.22 million in 2020.

PHL had to adapt to the restrictions, notably adjusted opening hours, and increased curbside pick-up and delivery options as well as social distancing protocols. “Since this phased reopening (in mid-June), the sales trends in most of our brands have been encouraging, with significant improvements being experienced in our delivery, drive-thru and curbside channels. We expect these channels to continue to expand, driven by significant focus and investment in these areas, which will improve the way customers enjoy our brands,” Mouttet said.

At the end of the half-year PHL had 129 restaurants with no new restaurant openings, remodels or relocations in the period.

The covid19 crisis has fundamentally impacted the business environment of Trinidad and Tobago, Mouttet acknowledged, but he noted the group’s strong balance sheet and stable of international brands that are well positioned in the local market. “These factors enable us to embrace this changed environment optimistically and we will take the opportunity over the next six months to structure and position our business to thrive in the months and years ahead.”

He said it was difficult to make forward looking statements on 2020’s performance because of the economic impact of covid19.

“However, barring the re-imposition of restrictions on restaurant operations or any other unforeseen circumstances, we expect an improved performance in the Second Half of 2020 when compared to the first six months.”