Collins Foods Ltd (ASX: CKF) has reported that its revenue growth for the first half of FY19 was 27.6%.

Collins Foods is a large fast food franchisee that operates KFC outlets in Australia, Germany and the Netherlands. It receives royalty revenue from Sizzler Asia outlets and Collins Foods has started to build Taco Bells in Australia. A fun fact is that Collins Foods’ stock ticker code ‘CKF’ is an anagram of KFC, the main source of its profit!

Collins Foods HY19 Result:

The fast-food business revealed revenue growth of 27.6% to $411 million. KFC Australia same-store sales grew by 3.1%, it opened two new restaurants and completed the acquisition of the final three restaurants in Australia from Yum!, the global rights owner of KFC.

Reported EBITDA grew by 42.9% to $53.6 million (click here to learn what EBITDA means) and reported net profit went up by 69.3% to $21.5 million.

The company now has 228 KFC outlets in Australia, it managed to increase its EBITDA margin to 17% from 16.8% in the prior year by focusing on operational efficiencies.

The Collins Foods CEO Graham Maxwell has more KFC outlets planned, “We are targeting to build another 40 to 45 KFC restaurants in Australia over the next 5 years.”

KFC Europe

Collins Foods recently expanded into Europe and it now has 17 KFCs in Germany and 18 in the Netherlands. A full half-year earnings from the Netherlands saw Collins Foods grow European revenue by 121.5% to $56.9 million.

During this half year, Collins Foods built and opened two KFCs in Germany with a further four planned for Europe in the rest of the year.

Taco Bell

Collins Foods now has two Taco Bell restaurants in Australia, the second was opened in Robina, Queensland. By the end of December 2018, management expects to have four operating.

Collins Foods has entered into an agreement with Yum! to build 50 restaurants over the next three years.

CEO Mr Maxwell said: “We are extremely excited about the growth and development opportunity for Taco Bell over the next 3 years. Customers continue to embrace the Taco Bell brand and are loving our great tasting products.”

Sizzler

Asian Sizzler royalty revenue grew by 19% thanks to additional restaurant openings and growth in same-store sales. There were 73 Sizzler restaurants in Asia at the end of the half year.

Dividend

The Collins Board declared a fully franked interim dividend of nine cents per share, which is a 12.5% increase compared to last year.

Outlook

Mr Maxwell was confident on Collins Foods future, “With a strong balance sheet and increasing operating cashflows we are well positioned to deliver on the growth opportunities we see for Collins Foods.”

The Collins Foods share price has opened up 2.1% in response to the result.

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