Tuesday, 3 December 2024 – Collins Foods Limited (ASX: CKF) has reported its half-year results for the period ended 13 October 2024 (HY25), showcasing resilience amid challenging economic conditions. Despite subdued consumer spending and persistent inflationary pressures, the company demonstrated strong fundamentals and continued growth in key areas.
Key Financial Highlights
- Revenue Growth: Revenue increased by 1.2% to $703.5 million (HY24: $695.2 million), driven by growth in Australia, offset by softness in European markets.
- EBITDA Decline: Underlying EBITDA decreased by 6.6% to $102.7 million, with inflationary pressures and flat same-store sales impacting margins.
- Net Profit: Underlying NPAT dropped by 23.8% to $23.7 million, attributed to lower EBITDA and higher depreciation from an expanded store network.
- Strong Cash Flows: Net debt reduced to $158.9 million, supported by robust cash generation, with a net leverage ratio of 1.09.
- Dividend: Declared a fully franked interim dividend of 11.0 cents per share (HY24: 12.5 cps).
Performance by Segment
KFC Australia
- Revenue Growth: Up 2.7% to $536.8 million, aided by six new restaurants.
- Digital Expansion: Digital channels accounted for 33.7% of sales, a 5.6 percentage point increase.
- Margin Pressure: EBITDA margins fell to 19.0% (HY24: 20.2%) due to inflation in wages, energy, and input costs.
- Customer Engagement: Marketing campaigns like “Christmas in July” and new product bundles boosted engagement and maintained market share.
KFC Europe
- Revenue Decline: Down 3.4% to $142.1 million, reflecting affordability challenges and softer consumer sentiment.
- Digital Dominance: Over 60% of sales in Europe came from digital channels.
- Margin Decline: EBITDA margins decreased to 12.0% (HY24: 13.7%), impacted by elevated labour costs.
- Innovation: New products, such as the “Beter Leven” Boneless Zinger, contributed to brand improvement.
Taco Bell
- Revenue Slip: Down 2.0% to $24.6 million, with a slight same-store sales decline of 0.3%.
- Challenges in Profitability: Underlying EBITDA was negative at $(0.9) million, impacted by inflation and elevated marketing investments.
- Brand Growth: Collaborations with iconic brands and value-focused pricing improved customer metrics.
Strategic Investments
- Store Network Expansion: Added six new KFC restaurants in Australia, with plans for seven more in FY25.
- Remodelling: Enhanced 22 restaurants, including seven “super-charged” outlets.
- Technological Upgrades: Continued investment in digital and operational efficiencies.
Outlook
- Short-Term Trends: Consumer conditions remain subdued, but a gradual improvement in sales trends is expected.
- FY25 Guidance:
- EBITDA margins projected at 14.2%–14.7% (FY24: 15.4%).
- EBIT margins anticipated at 6.8%–7.3% (FY24: 8.3%).
- Focus Areas: Operational excellence, disciplined expansion, and strategic M&A to drive growth and shareholder value.
CEO Commentary
Xavier Simonet, Managing Director and CEO, expressed confidence in Collins Foods’ long-term potential:
“We operate world-class brands in resilient markets. By focusing on operational excellence, leveraging our store network, and executing disciplined growth strategies, we aim to deliver sustainable shareholder value.”
Collins Foods remains well-positioned to capitalise on opportunities as consumer confidence rebounds.
