The Collins Foods Ltd (ASX: CKF) share price is in focus after the KFC franchisee business announced its FY25 result.
This business operates KFC outlets in Australia, Germany and the Netherlands. It recently announced it would be exiting its Taco Bell Australia business.
FY25 result
Collins Foods reported its result for the 12 months to 27 April 2025. The company said there was a challenging first half, but an improved performance in the second half.
Here are some of the highlights from the report:
- Revenue increased 2.1% to $1.52 billion
- Underlying EBITDA (EBITDA explained) fell slightly to $228.5 million
- Underlying EBIT dropped 5.7% to $117.1 million
- Underlying net profit declined 14.8% to $51.1 million
- Statutory net profit sank 88.5% to $8.8 million
- Final dividend of $0.15 per share
- Full-year dividend of $0.26, down 7%
KFC Australia performance
The company reported a resilient performance for the year for KFC Australia.
This division delivered revenue growth of 3% to $1.15 billion, which benefited from new restaurants, strong digital growth and product innovation.
Revenue in the second half of the year was 3.2% higher than the same period last year, with same store sales (SSS) improving to 0.6%.
Digital channels accounted for 34.2% of total sales in FY25, up from 29.4%, thanks to increased app adoption and higher kiosk availability.
Modest SSS growth and commodity cost deflation in the second half helped total underlying EBITDA increase 0.5% year on year to $222.6 million.
Underlying EBIT fell 2.6% year on year to $146.2 million because of expected higher depreciation with restaurant portfolio growth.
It opened 10 new restaurants and closed one during FY25. It expects to open between seven to ten new locations in FY26 and add between 28 to 30 by 2028.
KFC Europe
Revenue declined 0.4% to $312.3 million, with SSS declining 2.7%. Collins Foods pointed to challenging market conditions because of cost-of-living pressures, with the war in Ukraine impacting costs. There has also been an impact on American brands, particularly in the Netherlands.
As a result of the above, as well as development and access to high traffic sites impacted by a challenging regulatory environment, zoning and permitting restrictions, and access to energy, the company decided to impair 16 restaurants in the Netherlands with a $35 million impairment charge.
But, pleasingly, sales improved in the second half with European revenue growth of 2.3% year on year, though SSS still declined 1.7% in the second half.
On a full-year basis, German SSS growth was 3.3% and the Netherlands SSS declined 2.5%.
KFC Europe underlying EBITDA decline 7.5% because of subdued trading conditions, high labour and energy costs.
Lower EBITDA and higher depreciation due to a growing network caused underlying EBIT to sink 37.1% to $7.6 million.
Digital sales represented 62.9% in the Netherlands and 66.7% in Germany.
Unpaid entitlements
The company said it’s reviewing historical employment and wage data over an eight-year period to determine whether employees may have been entitled to additional payments.
The provision for wage compliance has been increased to $7.9 million, up from $2.7 million in 2024.
Final thoughts on the Collins Foods share price
In the first eight weeks of FY26, KFC total sales were up 4.9% in Australia, 2.6% in the Netherlands and 2.4% in Germany.
Its KFC SSS for the same period was 1.6% in Australia, 1.3% in Germany and a 0.2% decline in the Netherlands.
In FY26, it’s targeting underlying net profit growth in the low-to-mid teens in FY26.
I’m not surprised to see the market loves this result, it was a very positive update. Even from here, it could be one of the ASX dividend shares to watch in FY26.
