Collins Foods shares soar as FY25 earnings top estimates
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More news: Collins Foods shares rocketed in early trading, even as the KFC and Taco Bell operator reported a drop in full-year net profit, as earnings and margins beat market estimates.
Shares were up 17.4% to $8.52 at 11:10am AEST.
RBC Capital Markets analyst Michael Toner said the company's full-year earnings before interest, taxes, depreciation and amortisation beat consensus forecasts and guidance.
While top line growth was softer than expected, he said, margins topped estimates.
Toner said that Australian revenue growth "appears to be supported by new store openings", with Australia tracking ahead of RBC's expectations on total revenue growth.
Collins Foods profit tumbles 89% on $40m in write-downs
The news: KFC and Taco Bell operator Collins Foods has reported a 88.5% drop in net profit after tax to $8.8 million for fiscal 2025, after absorbing $40.8 million in restaurant impairments during the year.
The numbers: Net profit fell from $76.7 million in FY24, which benefited from a $20.2 million gain from the company's sale of Sizzler Asia.
Underlying net profit from continuing operations was down 14.8% to $51.1 million.
Revenue from continuing operations rose 2.1% to $1.5 billion, with growth in Australia partially offset by softer sales in Europe.
Collins Foods declared a total dividend of 26 cents per share, down from 28 cents a year earlier.
It is targeting year-on-year growth in underlying NPAT in the "low to mid-teens", on a percentage basis, in fiscal 2026.
The context: The company said it experienced an "improved performance" in the second half after a "challenging" first half.
Collins Foods managing director and CEO Xavier Simonet said the company delivered a "resilient performance" amid a "challenging consumer environment."
However, he noted that tax cuts and lower interest rates are beginning to support improvements in consumer sentiment, with same store sales improving the second half in Australia and the Netherlands.
What they said: "While trading conditions were subdued, particularly in the first half, the strength of the KFC brand held firm," Simonet said.
"Market share increased in both Australia and the Netherlands, underpinned by improvements in brand health, compelling marketing campaigns, product innovation, everyday value initiatives, and a heightened focus on operational excellence."
The source: ASX
