(Reuters) – Devyani International, which operates KFC and Pizza Hut restaurants in India, reported a lower pre-tax profit on Tuesday, hurt by soaring costs due to rapid store expansion, pushing its shares down by nearly 4%.
The company’s consolidated profit before tax fell 12% year-on-year to 85.2 million rupees (nearly $980,731) for the quarter ended December 31.
Devyani paid 151.3 million rupees in deferred tax expenses during the quarter, pushing its earnings after tax to a loss of 4.9 million rupees.
Its total stores, which include Costa Coffee outlets in India, rose to 1,542 from 1,342 at the end of the previous quarter.
This boosted revenue by nearly 54% to 12.94 billion rupees, marginally above analysts’ expectations of 12.90 billion rupees, as per data compiled by LSEG.
It also pushed total expenses higher by nearly 55%, which weighed on margins that fell to 68.6% from 69% in the previous quarter.
Demand at its existing stores was weak, with same-store sales at the Pizza Hut and KFC outlets in India declining 0.8% and 4.4%, respectively.
Devyani also has 374 stores in Nigeria, Nepal and Thailand.
($1 = 86.8740 Indian rupees)
(Reporting by Kashish Tandon in Bengaluru; Editing by Mrigank Dhaniwala)
