Guzman y Gomez posts 30% profit jump on Australia sales growth

Guzman y Gomez, a Mexican-themed fast-food chain, disclosed a significant 30% increase in annual profit on Friday, driven by a 17.9% rise in network sales across Australia and neighboring territories. This growth has propelled the shares of Guzman y Gomez to their highest level in nearly a year. The Australian segment, now the company's main growth engine following its exit from the United States in May due to underwhelming sales, contributed A$1.4 billion to the company's total sales for the year ending June 30.

Comparable sales within the segment experienced a modest 5.3% increase, matching the consensus forecast of 5.24% from Visible Alpha, but lagging behind the 9.6% growth observed the previous year. Analysts at Citi highlighted the strength of Guzman y Gomez's Australian network, noting that the growth was primarily volume-based rather than price-driven, a more resilient strategy compared to other quick-service restaurant competitors.

The company reported an underlying net profit after tax of A$53.4 million, an improvement from A$41.2 million the prior year, and announced a final dividend of 40.6 Australian cents per share, which includes a special dividend of 14.4 cents, surpassing the Visible Alpha consensus of 7 cents. Australian shares of Guzman y Gomez surged as much as 12.6% to A$27.00, outperforming the S&P/ASX 200, which declined by 0.2%.

However, the company reported a loss after tax attributable of A$26.7 million, marking a shift from a profit of A$14.5 million in the previous year, primarily due to a substantial A$67.3 million loss from discontinued U.S. operations.