Collins Foods (ASX:CKF) Projects Decline in FY25 EBITDA and EBIT Margins

Highlights

• In FY25, underlying EBITDA margins expected to range between 14.2% and 14.7%, down from 15.4% in FY24.
• EBIT margin is expected to range from 6.8% to 7.3%, down from 8.3% in FY24.
• Seven new restaurants are planned, with three in Australia and four in the Netherlands.

Collins Foods Limited (ASX:CKF) is an ASX-listed company that operates as a franchisee for KFC and Taco Bell in Australia. The company also operates a corporate franchisee for KFC in the Netherlands and Germany.

Half-Year Performance Highlights

In the first half of the financial year 2025 (1HFY25), Collins Foods’ revenue from ordinary activities rose by 1.2% YoY to AUD 703.5 million, compared to AUD 695.2 million in the previous year. This growth was primarily driven by a 2.7% YoY revenue increase in KFC Australia, which offset a 3.4% YoY decline in KFC Europe and a 2.0% YoY dip in Taco Bell operations.

In 1HFY25, Australian KFC portfolio was expanded with the addition of six new restaurants, taking the national footprint to 285 locations.

During the reported period, statutory net profit after tax (NPAT) dropped sharply by 52.1% YoY to AUD 24.1 million. Meanwhile, underlying NPAT decreased by 23.8% YoY, attributed to reduced EBITDA and higher depreciation costs due to an expanding store network. The period saw 9.7% YoY decline in cash and cash equivalents to AUD 88.6 million.

First Seven Weeks of 2HFY25

In the first seven weeks of the second half of FY25, total sales of KFC Australia grew by 3.9% YoY, with same-store sales rising 0.8%, indicating a gradual improvement in consumer trends. Sales in Europe fell by 1.6% YoY, with same-store sales declining 3.5% in the Netherlands and 0.4% in Germany. Meanwhile, performance of Taco Bell remained flat, with same-store sales declining by 1.4% YoY.

Company Outlook

The company aims to strengthen its store footprint by opening seven new restaurants, with three in Australia and four in the Netherlands. In FY25, underlying EBITDA margins are expected to fall in the range of 14.2% and 14.7%, down from 15.4% in FY24 and EBIT margins are forecast to range between 6.8% and 7.3%, down from 8.3% in FY24.

Interest expenses are projected at AUD 42 million, with an effective tax rate expected around 33%.

Recent Business Update

On 6 January 2025, the company notified of the change in indirect interest held by Christine Francis Holman through the Holman Investment Group P/L. This update included the acquisition of 393 ordinary fully paid shares under the Dividend Reinvestment Plan, valued at AUD 2,923.92.

Share performance of CKF

CKF shares closed 1.62% lower at AUD 7.27 per share on 6 January 2024. In the past one year, CKF’s share price has dropped by almost 39.42% and in three months, it has declined by 116.24%.

52-week high of CKF is AUD 12.55, recorded on 11 January 2024 and 52-week low is AUD 7.19, recorded on 20 December 2024.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 06 January 2025. The reference data in this report has been partly sourced from EODHD/Others.

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