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Margins under pressure but KFC delivers for Collins in Europe

Collins Foods has reported a 47 per cent increase in its net profit of $54.8 million and rewarded shareholders with an increased dividend.

Jun 28, 2022, updated Jun 28, 2022
Drew O'Malley, Collins Food Group

Drew O'Malley, Collins Food Group

Collins, which owns franchises for Taco Bell and KFC, said investors would receive a fully franked 15 cents a share final dividend, up from 12.5 cents last year. The total dividend for the year would be 27 cents a share, up 17.4 per cent.

Revenue for the company was up 11 per cent to $1.1 billion.

The result sent Collins’ shares soaring 15 per cent at the market open.

Europe was a big factor in the result while managing director Drew O’Malley said the KFC brand had never been stronger in Australia and it would continue to amplify its convenience through drone and UberEats deliveries.

O’Malley also indicated margins were being pressured and menu pricing was being used to offset this. This effectively meant prices would increase.

“While some margin compression in the short term is unavoidable, in the mid-term we expect margins to recover and remain on track to deliver on our growth ambitions,” he said.

But O’Malley also warned that the global environment was showing “unprecedented challenges” from inflation and supply chain shortages.

“Our quick service restaurant brands are nonetheless in excellent shape to navigate this landscape,” he said.

For the first seven weeks of its new financial year, O’Malley said sales were encouraging, particularly in Europe. KFC Netherlands was up 12 per cent in same store sales and Germany almost 20 per cent. KFC Australia was up 4.1 per cent.

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“KFC Europe had an impressive year of recovery with same store sales growth and margins above pre-Covid 2019 levels,” O’Malley said.

“Taco Bell returned to positive same store sales growth in the fourth quarter. We have been making additional investments in media to support core brand positioning around taste and value. We have also seen new store openings perform ahead of expectations, providing confidence in the brand’s potential as we look to accelerate the pace of development.”

 

 

 

 

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