Tim Hortons profit falls 39% in fiscal 2011

by Eric Schroeder
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OAKVILLE, ONT. — Net income at Tim Hortons Inc. in the year ended Jan. 1 was C$382,812,000 ($383,719,000), equal to C$2.36 per share on the common stock, down 39% from C$623,959,000, or C$3.59 per share, in fiscal 2010. Results in 2010 included a C$361,075,000 gain on the sale of the company’s interest in Maidstone Bakeries.

Net revenues rose 13% to C$2,852,966,000 ($2,859,710,000) from C$2,536,495,000. Same-store sales grew 4% in Canada and 6.3% in the United States.

“Our disciplined focus on responding to our guests’ needs, evolving our business and executing our growth strategies resulted in great momentum in the fourth quarter and a strong finish to the year,” said Paul House, executive chairman, president and chief executive officer. “We are pleased with our system’s performance in persistently challenging operating conditions throughout 2011 and believe we have created a strong foundation on which we will continue to build.”

Operating income in fiscal 2011 fell 35% to C$569,475,000 ($570,802,000) from C$872,238,000. Tim Hortons said the year-over-year decline was driven by the impact of the company’s divestiture of the Maidstone Bakeries business, partially offset by restaurant closings and impairment costs.

The U.S. segment had operating income of C$15,106,000 ($15,141,000) in fiscal 2011, which compared with a loss of C$18,363,000 in fiscal 2010. The company said strong system-wide sales growth drove the gain. Additionally, Tim Hortons said its momentum in the United States has benefited from a strategic focus on brand differentiation and awareness, product innovations, enhanced marketing and promotional initiatives and capital deployment to increase restaurant penetration in core growth markets.

For the fourth quarter ended Jan. 1, overall net income at Tim Hortons was C$102,953,000 ($103,203,000), or C$0.65 per share, down 73% from C$377,121,000, or C$2.19 per share, in the same period of fiscal 2010. Fourth-quarter net revenues totaled C$779,789,000 ($781,402,000), up 21% from C$643,501,000.

Tim Hortons increased its quarterly dividend by approximately 23.5%, to C$0.21 per share. The dividend is payable March 20 to shareholders of record as of March 5.

Additionally, the company said it will begin a new share repurchase program for up to C$200 million in common shares.

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