September 20, 2019 / 7:14 AM / a month ago

UPDATE 1-S.Africa's Grand Parade posts FY profit on Dunkin' closure

(Adds CEO comment, details, and background)

JOHANNESBURG, Sept 20 (Reuters) - Grand Parade Investments (GPI) on Friday posted a full-year profit as closure of its loss-making Dunkin’ Donuts unit lifted the South African investment company’s earnings.

GPI, which runs the Burger King chain of fast-food restaurants in South Africa and operates casinos, had reported a loss last year after its struggling units - Dunkin’ Donuts and ice-cream business Baskin-Robbins - dented the company’s earnings.

The closure of both units, announced earlier this year after GPI failed to find a buyer, helped lift the investment company’s headline earnings per share (HEPS).

The company’s HEPS - the main profit measure in South Africa that strips out certain one-off items, came in at 8.91 cents per share compared with a headline loss of 11.18 cents per share last year.

“We have made excellent progress in improving the overall profitability of the business, and this will continue to be a strong focus, along with driving new restaurant growth in Burger King,” CEO Mohsin Tajbhai said in a statement.

In 2016, GPI signed a franchise agreement with Dunkin’ Brands Group, which owns Dunkin’ Donuts and Baskin-Robbins, betting that South African demand for snacks and drinks from international chains would hold up, despite pressures on disposable income.

However, retailers have been struggling to boost sales as a slowing economy, high unemployment rate and rising fuel costs reduced consumers’ spending power.

The liquidation of Dunkin’ Donuts unit saw Grand Parade’s headline loss narrow to 25.1 million rand ($1.70 million) from 36.6 million rand last year, while Baskin-Robbins’ loss reduced to 11.5 million rand from 24.9 million rand in the year-ago period.

GPI said the company is planning to focus on its Burger King outlets, which helped lift earnings to 38 million rand, compared with 27.1 million rand loss posted a year earlier.

$1 = 14.7270 rand Reporting by Onke Ngcuka; Editing by Emma Rumney and Sherry Jacob-Phillips

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