Collins Foods, the owner of KFC franchises in Australia and Europe and Taco Bell in Australia, has announced a 52% fall in net profit for the first half of the 2025 financial year (HY25) as challenging conditions and inflation took its toll.
Collins Foods (ASX: CKF) said statutory net profit after tax (NPAT) was $24.1 million in the six months to October, compared with $50.5 million in HY24, reflecting a $20.2 million asset sale gain a year earlier and underlying performance.
Underlying NPAT from continuing operations fell 23.8% to $23.7 million due to lower earnings before interest, tax and depreciation (EBITDA) and higher depreciation on an increasing store footprint.
Underlying EBITDA from continuing operations dropped 6.6% to $102.7 million with margins impacted by flat same-store sales and ongoing inflationary pressures.
“Whilst trading results reflected the impact of adverse consumer conditions, Collins Foods continued to generate strong cash flows and ended the period with lower net debt, leaving it with significant capacity for investment in growth opportunities.” Collins Foods said in an ASX release.
The Board declared a fully franked interim dividend of 11.0 cents per share compared with 12.5 cents fully franked in HY24, to be paid on 6 January 2025 to shareholders on record on 9 December.
Sales in the first seven weeks of the second half reflected a continuing weaker consumer environment in Australia and Europe and the conflict in the Middle East which continued to impact sales, particularly in the Netherlands.
Managing Director and CEO Xavier Simonet said his priorities included driving same store sales growth and margin improvement, creating scale via profitable restaurant development and disciplined mergers and acquisitions, and reviewing the growth strategy.
“The business has strong fundamentals and is well positioned to benefit as consumer confidence returns,” Simonet said in the release.
At 12.45pm (AEDT) Collins Foods shares were trading at $8.36, down 26 cents or 3.0%, capitalising the company at $977 million.