Collins Foods reports strong growth boosted by KFC

The Australian operator of KFC, Taco Bell and Sizzler has reported a strong financial year, seeing growth across the board.

Announcing its FY19 results today, ahead of most listed companies as its financial year finished on 28 April 2019, Collins Foods (ASX: CKF) saw its revenue lift by 17 per cent to $901.2 million.

The group reported net profit after tax of $39.1 million, up 20.3 per cent from FY18.

KFC Australia was a big earner for the company, bringing in $120 million during the year, up 20.9 per cent from FY18.

CEO and managing director Graham Maxwell (pictured) says FY19 was a year of consolidation.

"Over the past 12 months we have consolidated our position as the largest KFC operator in Australia, with initiatives around digital and delivery expected to drive further growth," says Maxwell.

"In Europe, we are refining our KFC offering with a renewed focus on value to drive transactions. Taco Bell continues to perform in-line with expectations, with four stores now opened and strong customer engagement with the brand."

The company now has 64 KFC restaurants delivering direct to customers on the Deliveroo and Menulog apps.

During FY19 seven new restaurants were built and opened, and two were closed. The final three restaurants acquired as part of the acquisition of rival operator Yum! were completed early in FY19.

In Europe, Collins' KFC expansion is on track, with 37 stores opened in the continent during the financial year, including four newly built restaurants.

A national brand refresh has been launched in Germany, with a specific focus on the Stuttgart region where a local marketing campaign will focus on reinforcing value.

The group's rollout of Taco Bell in Australia is progressing, primarily in Queensland.

Four Taco Bell restaurants are now open in Queensland, and 10 more are planned to open before the end of the year, including the planned entry into Victoria in early 2020.

While Sizzler Australia saw some growth, the brand continues to perform better in Asia where revenue was up 12.2 per cent.

At the end of the financial year Collins operated 77 Sizzler restaurants in Asia, predominantly in Thailand.

Overall Sizzler revenue was down 8 per cent due to the closure of two Sizzler restaurants in Australia during the year.

The board has declared a fully franked dividend of 10.5 cents per share, up 16.7 per cent on the prior financial year, to be paid on 25 July 2019.

Maxwell says that during FY20 the company will focus on expanding its network and continue to focus on digital initiatives.

"Throughout our KFC Australia network, we plan to increase the rate of new restaurants builds from eight to nine, to nine to 10 in FY20," says Maxwell.

"Across the group, our ongoing focus remains to deliver value to our customers, driving transaction growth across our store footprint and geographies, and increasing returns for our shareholders."

Shares in Collins Foods are up 0.33 per cent to $7.70 per share at 11.14am AEST.

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Business News Australia