The Collins Foods Ltd (ASX: CKF) share price is rocketing higher on Tuesday following the release of its full year results.
At the time of writing the quick service restaurant operator’s shares are up 14.5% to $9.57.
How did Collins Foods perform in FY 2020?
For the 53 weeks ended 3 May 2020, Collins Foods delivered an 8.9% increase in revenue to $981.7 million.
This was driven by KFC Australia same store sales (SSS) growth of 3.5% and new KFC and Taco Bell store openings (9 KFC restaurants in Australia and 4 in Europe and 8 new Taco Bells). This offset a 5.8% SSS decline by its KFC Europe business.
The latter was largely the result of COVID-19 impacts. Prior to the pandemic, the company’s SSS were up 5.6% in Germany and down 3.6% in the Netherlands.
Collins Foods earnings before interest, tax, depreciation, and amortisation (EBITDA) post-AASB16 came in at $175.6 million. This was up 56.6% on the prior corresponding period. On an underlying basis, EBITDA came in 6.3% higher year on year at $120.6 million.
On the bottom line, net profit after tax (post-AASB16) fell 20% to $31.3 million. Whereas, underlying net profit after tax (pre- AASB16) rose 5.1% to $47.3 million.
Net operating cash flow (pre-AASB16) came in at $96.4 million and its net debt stood at $203.2 million at the end of the period. The latter leaves the company with a net leverage ratio of 1.69, down from 1.87 in FY 2019.
Finally, the Collins Foods board has declared a fully franked final dividend of 10.5 cents per share. This brings its total FY 2020 dividend to 20 cents per share fully franked, which is 2.5% higher than FY 2019’s dividend.
An unprecedented business and consumer landscape.
Collins Foods’ incoming Chief Executive Officer, Drew O’Malley, was pleased with the company’s performance. Especially given how it is operating in “an unprecedented business and consumer landscape.”
He added: “KFC Australia has once again shown that it is a safe and trusted brand that customers can rely on during uncertain times, allowing the business to quickly recover same store sales growth and continue its expansion into digital and delivery channels.”
“In Europe, sales were more severely impacted by COVID-19 restrictions, but we continue to experience a steady recovery. Taco Bell sales are also recovering close to pre COVID-19 levels, and home delivery in that brand has been launched ahead of schedule in 11 of the 12 restaurants,” he added.
FY 2021.
Mr O’Malley appears optimistic but cautious on FY 2021.
He commented: “Whilst COVID-19 restrictions have eased in Australia and Europe, we remain alert to the possibility of a second wave and are operationally prepared to deal with the consequences should that occur. We continue to stay focused on the health and safety of our employees and customers above all, though are confident we can also maintain strong unit economics in a broad range of contingencies.”
The company has plans to continue growing its network in FY 2021. It is targeting 9 – 12 new restaurant builds in Australia and 3 – 4 new openings in Europe.
It also aims to open 4 – 6 new Taco Bell restaurants. These could be the first of many new restaurants to come, with management commenting that it is “confident that Taco Bell will be another growth engine for Collins Foods in the years to come.”
No other guidance was provided for FY 2021. Though, a brief trading update reveals KFC Australia SSS of 11.6% and KFC Europe SSS of -13.4% for the first seven weeks of FY 2021.
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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Collins Foods share price rockets 14% higher on FY 2020 result appeared first on Motley Fool Australia.
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