Kentucky Fried Chicken Bermuda's net profit plunged 23.3 percent last year — even though across-the-counter sales dipped only slightly.

In a statement to the Bermuda Stock Exchange yesterday, the company said a rise in electricity bills, wage and salary increases and more expensive insurance coverage had driven up its expenses.

The gross sales profit was reported by the company as dropping only $17,307, but the full bottom line figure that includes all goods, services and expenses for KFC over the year shows a fall from $511,731 the previous year to $392,588 for the year that ended January 31.

In the past few months KFC has faced competition from Mr. Chicken, which opened up on the same stretch of Queen Street after taking over the former Ice Queen take-away restaurant premises.

Earlier this month KFC closed its restaurant for nine days to carry out improvements to its facilities.

Salaries and wages at the KFC fast-food restaurant went up $38,886 in the year, totalling $1,653,175.

Electricity cost the company almost $20,000 more than the previous year, amounting to $124,586, while insurance coverage was $21,806 higher last year.

In a statement to the Bermuda Stock Exchange the company said its net income was $392,588, a 23.3 decrease on the $511,731 made in 2005.

"Sales were lower by $55,291, which was a 1.2 percent decrease. Due to control over the cost of the menu items, gross profit only fell $17,307 over the previous year," said KFC (Bermuda) chairman Donald Lines in the statement.

He added: "We look forward to the 2008 fiscal year with optimism and hope that the steps we are taking to continuously upgrade our facilities will generate increased sales and profits in the future."

At the end of January the company had cash resources of $1,817,029 compared to $1,675,791 last year. Its total liabilities were also lower by more than $20,000 at $292,233.

Shareholders' equity amounted to $2,487,603, or $4.20 per share, up from $2,390,965 ($4.04 per share) in January 2006.

Mr. Lines thanked a number of staff by name, including Iris Kehler who was training officer and operations manager until May 7 last year.