Collins Foods shares slump on lower earnings guidance
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More news: Shares in Collins Foods are down nearly 5% to $8.23 in early trading on the ASX after operator of KFC and Taco Bell restaurants in Australia and Europe lowered its guidance for full-year earnings margin to between 14.2% and 14.7%, down from 15.4% in FY24.
RBC Capital Markets analyst Michael Toner said the first-half numbers were slightly better than expected due to lower than guided costs, but the sales trend remains challenging.
What they said: "Europe looks to be the main drag at the top line coming in below VA [Visible Alpha] consensus. KFC AU held up well, broadly in line at the revenue and EBITDA line," Toner said in a note.
"First seven weeks for KFC EU showing -1.6% sales growth is an improvement but cyclical headwinds still persist."
Collins Foods first-half profit slides, trims dividend
The news: Fast food chain operator Collins Foods has reported a slide in first-half profit amid flat sales and ongoing inflationary pressures.
The numbers: Net profit for the 24 weeks to 13 October was down 52.1% to $24.1 million, partly reflecting a $20.2 million gain on the sale of Sizzler Asia during the prior year.
Underlying profit from continuing operations fell 23.8% to $23.7 million. Revenue was up 1.2% to $703.5 million. The company will pay a fully-franked interim dividend of 11 cents a share, down from 12.5 cents a year ago.
The context: Collins Foods, which operates KFC and Taco Bell restaurants in Australia and Europe, attributed the weaker result to margins being impacted by a combination of flat same-store sales, ongoing inflationary pressures, higher depreciation on an increasing store footprint, and softness in Europe.
Sales in the first seven weeks of the second half have continued to reflect the weaker consumer environment in Australia and Europe, with the conflict in the Middle East also impacting sales, particularly in the Netherlands. KFC Australia's total sales increased 3.9% in the first seven weeks, while KFC Europe sales were down 1.6% and Taco Bell's overall performance was flat.
The group expects FY25 underlying EBITDA margins to be in range of 14.2% to 14.7%, down from 15.4% in FY24. Full year FY25 interest is estimated to be around $42 million, up from $38 million in FY24.
The source: ASX announcement
