Tim Hortons' profit jumps 17%

Higher sales and a lower Canadian tax rate helped Tim Hortons Inc. boost profit by almost 17 per cent in the third quarter, the company said Friday.

The doughnut-and-coffee chain said profit for the three months ending on Sept. 28 was $78.8 million (43 cents a diluted share), compared with $67.4 million (36 cents) a year earlier.

The profit jump was a sweet treat at Tim Hortons.(CBC)Revenue was $509 million, compared with $490.5 million in 2007.

Tim Horton's stock closed up 78 cents at $30.18 in TSX trading.

The company said margins in Canada were higher, and operating income (before taxes and financial charges) was up 11.6 per cent, compared with a loss in the U.S. segment.

The company will not meet its U.S. sales target of two to four per cent growth. It said it is changing some U.S. stores from company-operated restaurants to the owner-operated outlets, and plans to close some underperforming company restaurants in southern New England early in 2009.

"Our brand has experienced tremendous system-wide growth in the U.S. over the past several years. The plan to close underperforming restaurants is consistent with management's efforts to improve profitability in the U.S.," Don Schroeder, president and CEO, said in a news release.

Tim Hortons has spent $149.8 million this year to repurchase 4.5 million shares, and has completed its 2008 repurchase program. It plans to spend up to $200 million next year, beginning in the first quarter.

Profit for the nine months that ended on Sept. 28 was $215.6 million ($1.17 a diluted share), compared with $193.9 million ($1.02 a share) a year earlier.

Revenue was $1.48 billion, compared with $1.38 billion in the previous year.