KFC Fuels Collins Foods Earnings

By Glenn Dyer | More Articles by Glenn Dyer

Shares in KFC and Sizzler restaurants operator Collins Foods continued to rise yesterday in the wake of Wednesday’s interim earnings release.

The shares ended up more than 3.5% yesterday at $6.09 after a 5% plus rise on Wednesday when it revealed 7.8% rise in net profit to $15.4 million for the first half of the year.

The half year to October 16 saw the company expand further in Australia and make an initial foray into Europe (where bigger rival, Domino’s is expanding rapidly). The group bought more KFC restaurants — 13 in NSW and Victoria during the first half — and is now the biggest KFC franchisee in Australia with 190 stores.

Collins Foods also made its first foray into Europe with the acquisition of 11 KFC restaurants in Germany.

CEO Graham Maxwell said the Australian restaurants have been integrated into the business and are performing in line with expectations, while the German stores are being consolidated.

“With a strong balance sheet and proven capabilities running KFC restaurants, we will continue to pursue further acquisition opportunities as they arise, while also continuing to grow and refurbish our existing portfolio of restaurants,” Mr Maxwell said in a statement to the ASX.

Revenue was up 4.7% at $282.5 million for the six months to October 16.

KFC same store sales were down 0.6 per cent on the previous half, although total sales were up 6.4% at $249.6 million because of the 13 extra outlets purchased in the first half.

The group also opened one new KFC restaurant during the half, and plan to open a further five to six new restaurants before the end of the 2016-17 financial year next April.

The Sizzler business saw small improvement in same store sales growth, which fell 0.6%, much better than the 12% slump a year ago.

That improvement saw Sizzler’s earnings before interest, taxes, depreciation and amortisation jump 27% to $2.7 million.

Collins Foods also opened four Sizzler stores in Asia in the half year.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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