Burger King deal takes bite out of Tim Hortons profit

Tim Hortons says almost $30 million worth of costs associated with its deal with Burger King ate into its quarterly profit in the past three months. (Darren Calabrese/The Canadian Press)

Tim Hortons Inc. said Wednesday it earned $98.1 million in its latest quarter, down from $113.9 million a year ago, as it was hit by costs related to Burger King's deal to buy the company.

The coffee and doughnut chain said the profit amounted to 74 cents per share in its latest quarter, down from 75 cents per share a year ago.

Total revenue amounted to $909.2 million, up from $825.4 million.

Excluding $27.3 million in costs related to the deal with Burger King Worldwide Inc. and 3G Capital as well as $1 million in corporate reorganization costs, Tim Hortons said it earned an adjusted operating profit of $196.1 million for the quarter, up from $169.8 million a year ago.

Adjusted earnings per share totalled 95 cents, up from 76 cents a year ago.

"We have strong momentum in our business, supported by early stage execution of our strategic plan. We are pleased with our ongoing growth and evolution which we believe is positioning our brand for long-term success," Tim Hortons president and chief executive Marc Caira said.

"With our strategic transaction announced in August, we can build on our momentum and have the opportunity to participate in the creation of a global powerhouse in the quick service restaurant sector."

Tim Hortons reported same-store sales were up 3.5 per cent in Canada customers spent more, offsetting a slight decline in same-store transactions. The company said sales were helped by its new chicken sandwich specialty doughnuts and dark roast coffee.

In the U.S., same-store sales increased by 6.8 per cent in the quarter, helped by increased spending by customers and to a lesser extent an increase in same-store transactions.

Burger King agreed in August to buy Tim Hortons in a friendly deal worth more than $11 billion in stock and cash.

The deal still requires shareholder and regulator approvals.