COLLINS FOODS RETURNS TO PROFIT

Written on the 28 June 2016

COLLINS FOODS RETURNS TO PROFIT

STRONG sales across KFC stores has pushed Collins Foods (ASX:CKF) back in the black with a full-year profit of $29.1 million.

The result compares to a loss of $10.4 million a year earlier, with the Brisbane-based company's revenue also up at $574.3 million.

Six new KFC stores were built over the past 12 months, while 20 stores were remodelled in Queensland and Western Australia.

The company's network was also bolstered with the addition of 13 restaurants across Victoria and NSW last month, as well as strong performance in WA and NT stores which were acquired in 2014.

Collins Foods CEO Graham Maxwell (pictured) says growth through acquisitions has added synergies and cost efficiency to the business.

Net debt declined by $10.3 million to $112.5 million in FY16.

"Strong sales across our KFC restaurants were driven by excellent core product offerings combined with new product innovations and good value offers that kept customers coming back," Maxwell says.

"We continue to take a disciplined approach to controlling costs and improving efficiency and have achieved further margin improvements across all restaurants.

"We continue with our strategy of expanding our KFC network in regions with low market penetration while ensuring that we maintain the appropriate level of investment in our existing portfolio to keep these restaurants contemporary and provide our customers with a positive experience."

Sizzler Australia continues to be managed as a non-core business, with cost management offsetting a decline in sales to remain EBITDA positive.

Four restaurants were closed during the period contributing to a 17.9 per cent decline in revenue to $72.6 million. The company booked a $2 million impairment charge relating to the closures.

Collins Foods also opened another Snag Stand on the Gold Coast last November, taking the store total to six. The company plans to purchase the remaining 50 per cent ownership of the brand to drive growth in the future.

"Our priorities for KFC are to focus on top line growth, continue the disciplined approach to operational management to maintain margins in Queensland and to unlock further margin opportunities in Western Australia and Northern Territory," Maxwell says.

"With further growth anticipated in the 2017 financial year, we expect continued increased shareholder returns as we deliver on our growth plans."

The company plans to build another eight new KFC stores and remodel 14 others this financial year.

A final dividend of 8 cents per share will be paid on July 13.

Click here to find out how Collins Foods fared in 2016 Brisbane Top Listed Companies.

 


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