Collins Foods lifts after full-year profit jump

The news: Shares in Collins Foods, the operator of KFC and Taco Bell restaurants in Australia, rose in early trading after the company reported a jump in full-year profit.

The numbers: Net profit for the 52 weeks to 28 April surged 502% to $76.7 million, while revenue was up 10.4% to $1.49 billion. The company will pay a fully-franked final dividend of 15.5 cents a share, up from 15 cents a year ago. Shares in the company were up nearly 8% to $10.05 on the news of the strong performance.

The context: Collins Foods said the FY24 results partly benefited from the effect of a $36.7 million impairment of Taco Bell in the previous financial year, as well as a $20.2 million profit from the sale of Sizzler Asia. Underlying performance was also strong, with the company maintaining growth momentum by delivering record revenue and positive same-store sales across all business units. Profitability improved due to greater operational efficiency and cost control. Interim CEO Kevin Perkins said the performance came amid a challenging macro environment as consumers face ongoing cost of living pressures, with trading conditions softer in the second half due to higher input costs and weaker consumer sentiment.

The weaker trend has continued into the new fiscal year. In the first seven weeks of FY25, KFC Australia sales were up 1.5%, KFC Europe sales were down 0.1% and Taco Bell sales increased by 0.6%.