Collins Foods’ Shares Uplifted On ASX After Announcing Positive 1H FY19 Results

Collins Foods Limited

On 28 November 2018, Collins Foods Limited (ASX: CKF) announced its results for the half-year ended 14 October 2018 (HY19). Following the release of this news, the share price of the company increased by 5.471 percent as on 28 November 2018.

In H12019, the company reported a statutory net profit attributable to members of $21.5 million which is an increase of $8.8 million (69.0%) compared to the statutory net profit of $12.7 million in the previous corresponding period. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The company reported basic earnings per share of 18.48 cents in H1 2019 which was 11.31 cents in the corresponding previous period. The company’s revenues for the half-year were $411.0 million which were 27.6% higher than the previous corresponding period. The revenues from the domestic KFC restaurants segment were $330.0 million in the first half of FY 2019 which are 21.9% higher than the first half of FY 2018. In the Sizzler restaurants segment, statutory revenues were $22.2 million, down 7.6 percent compared to the previous corresponding period. Over 1H FY19, net debt of the company decreased slightly to $226.2 million following a period of increased gearing to support the acquisitions undertaken. The operating cash flow of the company increased by 31.6% to $35.8 million in H1 2019. The company declared a fully franked interim dividend 9.0 cents per ordinary share which is payable on 21 December 2018.

While commenting on the 1H FY19 results Managing Director & CEO, Mr. Graham Maxwell informed about the strong results of the company’s KFC Australia business, and he further highlighted that the company completed the acquisition of the last three remaining stores from Yum! which makes Collins Foods the largest KFC franchisee in Australia with 228 stores.

During 1H FY19, Collins Foods successfully opened its second Taco Bell restaurant in Robina (Queensland) and is expected to open a further two restaurants prior to the end of this calendar year. Further, the company also entered into a Development Agreement with Taco Bell (a subsidiary of Yum! Brands Inc.) to build 50 restaurants over the next three calendar years.

Collins Foods’ KFC Europe operation is currently covering 17 restaurants in Germany and 18 in the Netherlands. During the half year, the company’s revenue from KFC Europe operation increased by 121.5% to $56.9 million. During 1H FY19, the company built and opened two restaurants in Germany and it is expecting to open four new restaurants across Germany and the Netherlands in the second half of FY19.

According to Mr. Maxwell, the company is expecting to build and open a total of 8 KFC restaurants in Australia by the end of FY 2019. In addition, the company is also planning to significantly expand the size of its home delivery footprint in the next six months using multiple aggregators.

In the last six months, the share price of the company increased by 20.29 percent as on 27 November 2018. CKF’s shares traded at $6.940 with a market capitalization of circa of $766.65 million as on 28 November 2018 (AEST 1:58 PM).


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