Collins Foods (ASX:CKF) Reports HY20 Profit Of $20.4 Million


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Collins Foods (ASX: CKF) has reported its half year result to 13 October 2019, sending the share price up 3.5%.

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’ ticker of CKF is an anagram of KFC, its main source of earnings.

Collins Foods’ HY20 Result

Collins Foods grew revenue by 9.2% to $448.8 million. KFC Australia same store sales (SSS) grew by 4.9% with all states showing positive SSS growth. KFC Europe SSS grew by 0.1% with “positive” results in Germany driven by value initiatives and a national brand refresh.

KFC Australia’s underlying EBITDA margin (click here to learn what EBITDA means), before AASB 16 changes, improved to 17.5% – up from 17% last year. This was driven by positive economies of scale from SSS growth and cost control.

Statutory EBITDA (pre AASB 16) grew 9.7% to $58.8 million and underlying EBITDA (pre AASB 16) increased 7.4% to $57.7 million.

Statutory net profit (pre AASB 16) increased 12.1% to $24.1 million and underlying net profit (pre AASB 16) rose 9.1% to $23.9 million. However, reported net profit fell 5% to $20.4 million when including the new accounting standards.

The company said that Collins Foods continues to roll out Taco Bells. The fifth restaurant was opened during the first half and another two were opened after the end of the half year period, bringing the total number in Queensland to seven. The company plans to open its first two restaurants in Victoria. It’s targeting 20 new Taco Bell builds in the 2020 calendar year.

Collins Foods also reported that its Sizzler Asia royalty revenue increased by 17.9% with a total of 76 restaurants now operating in Asia.

Collins Foods Dividend

The Board decided to increase the interim dividend by 5.6% to 9.5 cents per share.

Outlook

The company expects to continue up new stores across its various markets whilst improving its transaction growth and sales.

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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.