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 REFINITIV.

Disclaimer

This article has been prepared by Kalkine Media, echoed on the website kalkinemedia.com/au and associated pages, based on the information obtained and collated from the subscription reports prepared by Kalkine Pty. Ltd. [ABN 34 154 808 312; AFSL no. 425376] on Kalkine.com.au (and associated pages). The principal purpose of the content is to provide factual information only for educational purposes. None of the content in this article, including any news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations, and video is or is intended to be, advisory in nature. The content does not contain or imply any recommendation or opinion intended to influence your financial decisions, including but not limited to, in respect of any particular security, transaction, or investment strategy, and must not be relied upon by you as such. The content is provided without any express or implied warranties of any kind. Kalkine Media, and its related bodies corporate, agents, and employees (Kalkine Group) cannot and do not warrant the accuracy, completeness, timeliness, merchantability, or fitness for a particular purpose of the content or the website, and to the extent permitted by law, Kalkine Group hereby disclaims any and all such express or implied warranties. Kalkine Group shall NOT be held liable for any investment or trading losses you may incur by using the information shared on our website.