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Owner of Burger King SA back in the black after dumping Dunkin’

Grand Parade Investments [JSE: GPL] has returned to profit, after it closed its Dunkin' branches in South Africa, and thanks to a strong performance from Burger King.

Its headline earnings are up 180% for the year to end-June, with the company posting a headline profit of R38m, thanks in part to the closure of its loss-making Dunkin’ and Baskin-Robbins businesses.

GPI, which owns the Burger King franchise in SA, reported that the fast-food chain's sales for the year increased by 34% to more than R1bn. It delivered a headline profit of R11.7m, compared to a loss R27.1 million in the prior period.

Sun Slots also saw a 50% improvement in its contribution for the year (R55.2m).

Operating profit from GPI's continuing operations doubled to R21.6m.  

"The profitability of the business has been long awaited by the investment community and is a major milestone in the life of the business," GPI said in a statement.

Unhappy with its financial performance, the group's institutional investors tried to oust the company's chairperson Hassen Adams. He finally resigned as executive chairperson in May this year after selling R60m in shares. Adams remains on the board.

However, while it returned to profit, GPI warned that "tough macroeconomic conditions affected consumer spending which in turn had devastating effects on the retail and the food and beverage sector in South Africa".

"During these challenging conditions and the uncertain economic outlook, it is critical to take a cautious approach hence GPI’s drive to restructure its balance sheet by reducing debt. The conclusion of the Spur and Sun Slots deals will reduce debt significantly and bolster GPI’s balance sheet. In addition, the Group continues to look at improving efficiencies in the business by reducing head office costs."

GPI recently announced a deal to sell its 30% stake in Sun Slots back to Sun International for R504m, and also sold a 10% stake in Spur earlier this year. 

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