Collins Foods Reports 12.7% Net Profit Increase, Declares 13c Dividend
Collins Foods Limited reported solid half-year growth with revenue up 6.6% and net profit rising 12.7%, driven by strong performance in its KFC operations across Australia and Europe. The company declared a fully franked interim dividend of 13 cents per share, while navigating increased provisions linked to wage compliance and ongoing class action litigation.
- 6.6% revenue increase to $750.3 million
- 12.7% rise in net profit to $27.2 million
- Underlying EBITDA up 11.0% to $113.9 million
- Interim fully franked dividend declared at 13.0 cents per share
- Increased provisions for wage compliance and class action risks
Strong Revenue and Profit Growth
Collins Foods Limited has delivered a robust financial performance for the half year ended 12 October 2025, with revenue climbing 6.6% to $750.3 million and net profit after tax increasing 12.7% to $27.2 million. This growth was underpinned by the company’s dominant position as the largest KFC franchisee in Australia, alongside its expanding footprint in Europe.
The company’s underlying earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) rose 11.0% to $113.9 million, reflecting operational efficiencies and steady demand across its quick service restaurant portfolio. Underlying net profit after tax surged 29.5% to $30.8 million, highlighting improved profitability beyond statutory figures.
Geographic and Brand Performance
Collins Foods operates 290 KFC and 27 Taco Bell restaurants in Australia, along with 62 KFC outlets in the Netherlands and 17 in Germany. The Australian KFC segment generated $563.8 million in revenue, up 5.0%, while the European KFC segment saw a stronger 14.6% increase to $162.9 million. Taco Bell revenues declined slightly by 3.9% to $23.6 million, reflecting ongoing challenges in that brand’s Australian market.
Investment in new restaurants, remodels, digital platforms, and sustainability initiatives continued, with $26.9 million spent during the period. These investments aim to enhance customer experience and operational efficiency, positioning Collins Foods for long-term growth.
Balance Sheet and Dividend Highlights
The company maintained a strong balance sheet, reducing net debt to $138.9 million and holding $101.6 million in cash and equivalents. Loan covenants were comfortably met, supported by undrawn bank facilities totaling over $217 million.
Reflecting confidence in its financial position, Collins Foods declared a fully franked interim dividend of 13.0 cents per share, up from 11.0 cents in the prior corresponding period. The dividend reinvestment plan remains active, offering shareholders the option to reinvest dividends into additional shares.
Legal and Compliance Provisions
Notably, the company increased provisions related to potential wage compliance payments, now estimated at $10.5 million, as it continues to address historical employment entitlements. This follows ongoing correspondence with the Fair Work Ombudsman and the commencement of remediation payments in November 2025.
Additionally, Collins Foods is a respondent in a consolidated class action concerning alleged unpaid rest breaks for employees dating back to 2017. The litigation remains at an early stage, with the financial impact yet to be determined, introducing a degree of legal uncertainty.
Outlook and Strategic Positioning
While no material events have occurred since the reporting period, Collins Foods’ continued investment in its restaurant network and digital capabilities suggests a focus on sustaining growth momentum. The company’s ability to manage legal risks and wage compliance issues will be critical in maintaining investor confidence and operational stability moving forward.
Bottom Line?
Collins Foods’ solid half-year results and dividend boost come with legal and compliance challenges that investors will watch closely.
Questions in the middle?
- How will the ongoing class action litigation impact Collins Foods’ future financials?
- What strategies will Collins Foods deploy to revive Taco Bell’s Australian performance?
- Could further wage compliance provisions affect the company’s profitability or cash flow?
