Collins Foods delivers strong earnings on the back of at-home dining

Collins Foods delivers strong earnings on the back of at-home dining

The convenience and ease of at-home dining has resulted in strong earnings growth for the Australian operator of KFC and Taco Bell in FY21, making Collins Foods (ASX: CKF) another beneficiary of the pandemic economy.

Group revenue was up by 12.4 per cent to crack the $1 billion mark in FY21, buoyed by KFC Australia revenue growth of 13.8 per cent.

The company also increased its underlying profit after tax from $48.1 million last financial year to $56.9 million in FY21

Commenting on the results, Collins Foods CEO Drew O'Malley said the company successfully navigated the challenges of COVID-19.

"Our focus on people and operations was critical to this result, as our teams did an exceptional job of keeping our restaurants operating at a world-class level, often without the benefit of dine-in sales channels," O'Malley said.

"In what was a challenging environment for the foodservice market over the period, KFC Australia increased market share and grew its user base through marketing and menu items that resonated with customers, as well as a clear focus on guest experience and convenience."

While KFC Australia was the company's standout performer, the same could not be said for the group's European arm of the business, with ongoing lockdowns and dining restrictions in place for most of the year making an impact.

"Nevertheless, we were able to leverage weakness in the market to advance our strategic interests there, recently executing a more favourable Development Agreement and increasing our footprint in the Netherlands with the acquisition of eight new restaurants," O'Malley said.

"Both of these moves will position the European business unit for a favourable recovery."

Meanwhile, Taco Bell Australia saw 57 per cent growth over the period.

"While we are still in the early stages of building the brand here in Australia, Taco Bell has shown noticeable improvement in FY21 with 57 per cent revenue growth and achieving profitability at the restaurant level," O'Malley said.

"Consumer adoption of the 'Mexican' category continues to increase and, as a QSR offering, Taco Bell's focus on taste, convenience and value remains a key differentiator.

"After a COVID-19 related development hiatus in H1 FY21, we opened four new stores in H2 FY21 and our focus has returned to ramping up the build rate in FY22 as we continue to drive brand awareness and trial."

The company's board has declared a fully franked final dividend of 12.5 cents per ordinary share, up 19 per cent on FY20.

Shares in CKF are down 2.36 per cent to $12.40 per share at 12.16pm AEST.

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