Burger King 2Q Net Down On Stronger Dollar;Cuts Year View

Burger King Holdings Inc.(BKC)reported a 10% decrease in second-quarter net income, as a stronger U.S. dollar took a toll on earnings despite improved sales.

The quarter's results were below analysts' expectations, and the stronger dollar prompted the fast-food restaurant operator to lower its earnings outlook for the year.

Burger King Chairman and Chief Executive John Chidsey on Thursday cautioned that the stronger dollar may continue to hurt profits, though he said results would continue to benefit from easing food and energy costs.

Revenue climbed 3.4% to $634 million. Same-store sales were up 2.9% worldwide, including 1.9% in the U.S. and Canada.

Burger King reported net income for the quarter ended Dec. 31 of $44 million, or 33 cents a share, down from $49 million, or 36 cents, a year earlier. Burger King said currency fluctuations cut profit by 5 cents a share.

Analysts, on average, expected per-share earnings of 37 cents with revenue of $659 million.

Restaurant margins fell to 13.7% from 15.6%.

The economic slowdown is helping fast-food chains maintain positive sales growth as consumers trade down from higher-priced sit-down restaurants. Yet Burger King sales gains came in below what some analysts were expecting, possible signs that consumers are looking to reign in spending even when going out for low-cost meals.

"Even the fast-food operators are facing some incremental sales pressures in the U.S. from the slowing economy,"said Forte, who was looking for a 3.9% increase in worldwide same-store sales. But Burger King, he said, "is very well positioned to take advantage of the consumer trading down."

Discounts and value menus remain popular with fast-food chains, such as McDonald's, whose latest profits topped analysts' estimates, as cash-strapped consumers sought out its cheaper eats.   Burger king News Release