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ASX 200 rises 1.4%, Collins Foods delivers tasty returns

The S&P/ASX 200 Index (ASX: XJO) went up 1.4% today, defying the ongoing negativity with COVID-19.

This afternoon the Victorian Premier Daniel Andrews has announced that restrictions will be reintroduced for 10 Victorian suburbs. People will only be allowed to leave their house for four reasons. Those reasons are: for work or school, for care or care giving, for daily exercise, for food and other essentials. Police will actively enforce the suburb lockdowns with on-the-spot fines if people are out of their homes for anything other than the permitted reasons.

Collins Foods Ltd (ASX: CKF) delivers tasty returns

The ASX 200 fast food business announced its FY20 result today.

Revenue grew by 8.9% to $981.7 million. KFC Australia delivered same store sales growth of 3.5%. However, KFC Europe’s same store sales dropped 5.8% mainly due to COVID-19.

Collins Foods said that Taco Bell continues its expansion amidst high brand engagement, with recent shifts towards drive-thru and delivery channels.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) (pre AASB 16) grew 6.3% to $120.6 million. Underlying net profit after tax (NPAT) (pre AASB 16) rose by 5.1% to $47.3 million. Statutory NPAT came in at $31.3 million.

Collins Foods said that net debt was down to $203.2 million (compared to $212.5 million in FY19). The net leverage ratio was down to 1.69 times (compared to 1.87 times in FY19).

The board of Collins Foods decided to declare a final dividend of 10.5 cents per share, bringing the total FY20 dividend to 20 cents per share, up from 19.5 cents in FY19.

In FY21 Collins Foods wants to add up to 12 new KFC Australia restaurants, three to four European KFC restaurants and four to six Taco Bell restaurants.

Freedom Foods Group Ltd (ASX: FNP) CEO resigns

The board of ASX 200 company Freedom Foods announced today that last night it accepted the resignation of CEO and managing director Rory Macleod. He has resigned from all board and executive positions.

The company also announced that further to the update it released on 25 June 2020, it has engaged Ashurst and PwC to advise and assist with ongoing investigations into the company’s financial position.

Freedom Foods shares remain suspended.

Lifestyle Communities Limited (ASX: LIC) acquisition

The business has acquired a new 9-hectare site in Clyde which is located in the south east growth corridor.

The new site will add approximately another 230 homes which increases Lifestyle Communities portfolio to 4,518 home sites including sites in planning, development or under management.

Lifestyle Communities also announced an increase of its existing debt facility by $50 million and extended its tenor. The result of the amendments is a combined facility of $275 million comprising a $165 million tranche maturing in March 2024 and a $110 million tranche with a maturity of June 2025.

The managing director of Lifestyle Communities, James Kelly, said: “We are seeing a number of high-quality sites come to market because of the change in macro conditions. The increase in facility size is an important step to ensure we have capacity to secure additional sites that meet our site selection criteria as they become available.”

Nufarm Limited (ASX: NUF) announces changes to global manufacturing footprint

After the market had closed, ASX 200 agri business Nufarm announced that it’s going to cease manufacture of insecticides and fungicides at its Raymond Road site in Laverton, Australia and curtail herbicide manufacturing at its operations in Linz, Austria.

Nufarm expects that the initiatives announced will deliver an improvement to earnings before interest, tax, depreciation and amortisation (EBITDA) of up to $15 million per annum. However, there will be one-off cash costs relating to the restructuring of approximately AU$25 million, which will be partially offset by proceeds from the future sale of the Raymond Road property.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods Limited and Freedom Foods Group 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.

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