The Collins Foods Ltd (ASX: CKF) share price has been a strong performer on Tuesday morning following the release of its half year results.
At the time of writing, the quick service restaurant operator's shares are up 3% to $12.88.
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Collins Foods share price higher on strong profit growth
- Revenue up 9.5% to $534.2 million
- Statutory EBITDA from continuing operation up 10% to $92.5 million
- Underlying EBITDA from continuing operations up 13.1% to $94.9 million
- Underlying net profit after tax up 31.6% to $28.9 million
- Fully franked interim dividend up 14.3% to 12 cents per share
What happened during the first half?
For the six months ended 17 October, Collins Foods delivered a 9.5% increase in revenue to a record of $534.2 million. This was driven by a return to growth from its European operations and solid performances from the rest of the business.
KFC Australia delivered a 4.4% increase in revenue to $433.7 million, KFC Europe's revenue grew 31.7% to $84.7 million, and Taco Bell Australia's revenue jumped 33% to $14.8 million. The former was achieved despite cycling very strong same store sales growth in the prior corresponding period.
Things were even better on the bottom line, with Collins Foods reporting a 31.6% increase in underlying net profit after tax to $28.9 million.
And while its operating cash flow was weaker compared to a year ago, that didn't stop the company from increasing its interim dividend by 14.3% to 12 cents per share.
Another positive was its store expansion. The company notes that it increased its restaurant footprint by nine to 322 during the half. This means it is on track to open a record number of new restaurants this financial year.
Management also highlighted that it has a significant organic growth pipeline and attractive opportunities to reach scale in KFC Netherlands and Taco Bell Australia, while adding to its core KFC Australia footprint.
Management commentary
Collins Foods' Managing Director & CEO, Drew O'Malley, commented: "Collins Foods has successfully leveraged brand strength, scale and operational efficiency to deliver another strong first half result."
"Record revenues were achieved in KFC Australia, despite cycling exceptional same store sales (SSS) growth in HY21. The KFC brand is stronger than ever and continues to take market share in a growing but competitive chicken category. Growth in digital and delivery channels, ongoing investment in innovation, and a laser focus on customer experience and operational excellence has enhanced convenience and is driving brand loyalty," he added.
Outlook
While no guidance was provided for the full year due to COVID uncertainty, management remains positive on its outlook over the medium and long term.
Mr O'Malley said: "We see attractive opportunities for continued growth across the group, leveraging digital and delivery innovations to further grow our core KFC Australia business and scale our KFC Europe and Taco Bell brands. Collins Foods' strong cash generation and healthy balance sheet supports our growth strategy, and we remain on track to open up to 24 new restaurants across the group in FY22."
"Whilst there is significant opportunity in the medium and long term, uncertainties remain in the short term with rising COVID-19 cases heading into the European winter," he added.
