The Collins Foods Ltd (ASX: CKF) share price has gone up by around 13% after reporting its FY22 result.
Collins Foods is a large franchisee operator of KFCs in Australia and Europe, as well as a small but growing network of Taco Bells in Australia.
Collins Foods FY22 highlights
The ASX share reported these highlights to investors:
- Revenue rose by 11.1% to $1.18 billion
- Statutory EBITDA (EBITDA explained) rose 12.5% to $207.2 million
- Statutory net profit after tax jumped 47.2% to $54.8 million
- Underlying net profit went up by 25% to $59.7 million
- Net operating cashflow up 21.9% to $156.3 million
- Total dividends up 17.4% to $0.27 per share
Collins Foods noted that KFC Australia managed to deliver positive same store sales growth (1.4%) for the full year, despite strong growth in the prior year, with total revenue rising 6.1% to $955.5 million.
KFC Europe saw revenue growth of 41.2%, with same store sales growth of 16.8%. It continues to acquire more stores, buying 15 restaurants in the Netherlands and opening another three.
Taco Bell saw revenue growth of 27.5% to $35.8 million. At the restaurant level, Taco Bell made $4 million of EBITDA.
Trading update
The company is seeing ongoing sales growth in FY23, particularly in Europe, with all business units reporting positive same store sales growth. In the first seven weeks of FY23, KFC Netherlands has seen 12.2% same store sales growth, with KFC Germany seeing 19.4% same store sales growth. KFC Australia same store sales were up 4.1%, while Taco Bell same store sales were up 1.4%.
It’s planning to grow its footprint by another 20 to 29 new restaurants in FY23, including 9 to 12 new KFC Australia restaurants and 9 to 12 new Taco Bells. It’s also planning two to five new KFC Europe restaurants.
My thoughts on the Collins Foods share price and result
Despite the rise today, the company is still down around 25% from the start of the year. Considering it continues to generate sales and profit growth, I think it’s one of the more attractive ASX shares around. It is a pretty simple business to understand and Europe is a big market for the company to keep growing in.
Taco Bell and the growing dividends are other reasons to like the business. At the current Collins Foods share price, I think it’s got a good long-term future.
