ASX 200 stock jumps 10% on strong FY24 results

Collins Foods Ltd (ASX: CKF) shares are soaring on Tuesday morning.

At the time of writing, the ASX 200 stock is up 10% to $10.30.

This follows the release of the KFC restaurant operator’s FY 2024 results.

ASX 200 stock jumps on FY 2024 results

• Revenue from continuing operations up 10.4% to $1,488.9 million
• Underlying EBITDA from continuing operations up 12% to $229.8 million
• Underlying net profit after tax from continuing operations up 15.6% to $60 million
• Fully franked final dividend of 15.5 cents per share

What happened in FY 2024?

For the 12 months ended 28 April, Collins Foods reported a 10.4% increase in revenue from continuing operations to $1,488.9 million. Continuing operations exclude Sizzler Asia.

Management advised that this was driven by growth across all business units. KFC Europe was the star of the show, reporting a 26.1% increase in revenue to $313.5 million. This was supported by an 11.7% lift in Taco Bell revenue to $54.4 million and a solid 6.6% increase in KFC Australia revenue to $1,121 million.

The ASX 200 stock’s underlying EBITDA from continuing operations grew at a slightly quicker rate of 12% to $229.8 million. This reflects its strong sales growth, operational efficiencies, and cost control.

Once again, it was the KFC Europe business that was the standout. It reported a 29.6% increase in underlying EBITDA to $42.5 million. Whereas KFC Australia’s underlying EBITDA rose 9.8% to $221.4 million and Taco Bell posted an underwhelming $0.7 million loss.

Though, the latter was an improvement from a $1.5 million loss a year earlier. Management notes that Taco Bell developments remain temporarily paused while it optimises its current network of 27 restaurants in suburban metro geographies.

In light of the above, a fully franked final dividend of 15.5 cents per share was declared. This brings its total FY 2024 dividends to 28 cents per share, which is up 3.7% year on year.

Management commentary

Collins Foods’ interim CEO and managing director, Kevin Perkins, was pleased with the results. He said:

Collins Foods maintained its growth momentum, delivering record revenue and positive same store sales across all business units. Growth was driven by our growing footprint with 17 net new restaurants added across the Group, increased adoption of digital channels, new product innovation, and value-led initiatives. Profitability also improved over the year, benefiting from sales growth, greater operational efficiency and cost control.

Our solid FY24 performance is even more impressive given the challenging macro environment. While the QSR sector is one of the most resilient, it is not immune to the ongoing cost-of-living pressures facing consumers. As expected, trading conditions were softer in the second half given the dual impacts of inflation across all input lines and weaker consumer sentiment. We continue to manage our business for the long-term, prioritising brand health by ensuring value across the menu to retain consumer trust.

Outlook

The ASX 200 stock’s growth has moderated since the end of FY 2024.

Management notes that this reflects “the continuation of a weaker consumer environment in Australia and Europe, as well as the lapping of strong growth in the prior year.”

During the first seven weeks of FY 2025, KFC Australia’s total sales increased 1.5%, KFC Europe sales are down 0.1%, and Taco Bell sales are up 0.6%.

Perkins commented:

Significant cost-of-living and inflationary pressures are expected to remain for much of the year ahead, impacting sales growth and we expect margin pressure across the Group.

Current conditions remain challenging, however, they have not dampened our enthusiasm for growth. We’re continuing to grow our KFC network with Australian expansion in FY25 expected to be a little ahead of our development agreement commitment, and a number of new restaurants are planned for the Netherlands. We’re also exploring and evaluating M&A opportunities for KFC in existing markets as well as complementary new geographies.

The post ASX 200 stock jumps 10% on strong FY24 results appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.