Los Angeles, May 1 - Burger King Holdings Inc, posted better-than-expected earnings and raised its full-year profit-per-share growth forecast on Thursday but said restaurant renovation-related costs would weigh on margins in the current quarter.
The world's second-largest hamburger chain said net income rose to $41 million, or 30 cents per share, in the third quarter ended on March 31, from $34 million, or 25 cents per share, a year earlier.
Analysts, on average, had been expecting it to earn 27 cents per share, according to Reuters Estimates.
Revenue rose 10 percent to $594 million from $539 million. Sales at established stores open at least 12 months were up 5.8 percent worldwide. Same-store sales were up 5.4 percent in the United States and Canada.
Burger King, best known for its Whopper hamburgers, has been sprucing up old outlets and expanding value menu items and business hours in a bid to catch up with industry rivals.
It said in the fiscal fourth quarter the renovation project and the resulting loss of sales from temporarily closed units will negatively affect restaurant margins.
It expects the renovations will improve sales beginning in the 2009 fiscal year beginning in July.
During the current quarter, the company plans to begin rolling out price increases that should help offset the rising costs for meat and other items.
Burger King's same-store sales growth has recently outpaced the fast food industry, which is luring customers with value-priced menu items, even as the costs for ingredients like beef and bread have skyrocketed.
Last week, Burger King's larger rival McDonald's Corp posted its first decline in in five years in monthly sales at established U.S. stores, which rattled shares of all fast-food chains.
In the United States, Burger King said the "Whopper Freakout" media campaign, marking the 50th anniversary of its best-known burger, helped boost results. It also said it promoted its Spicy Chick'n Crisp sandwich and Whopper Jr. sandwich value menu offerings.
Its premium menu offerings, like the Three Pepper Angus Burger, and limited time offers, such as the Chorizo Angus, contributed "significantly" to sales in Europe, the Middle East, Africa and Asia Pacific, it said.
The company said it will make a variety of moves to get the maximum benefit from its portfolio of restaurants.
Among other things, it will close underperforming restaurants, sell company-owned units to franchisees or make acquisitions.
During the third quarter, it bought 56 restaurants in Carolinas from one of its largest franchisees.
Looking ahead, the company said it expects fiscal year earnings per share growth of "20 percent plus" year-over-year. Previously, it forecast year-over-year earnings per share growth in excess of 15 percent for the 2008 fiscal year ending in June.
It forecast full-year earnings per share of $1.33 to $1.35.
Shares were down 2 cents at $27.88 in late-morning trade on the New York Stock Exchange.