Collins Foods has seen more than a quarter of its market value eliminated after it announced a dramatic downgrade in profit and earnings, with the nation’s largest KFC franchisee citing continued fragile consumer confidence.
The fall is a major blow for the company, which only listed in August after being majority owned by Pacific Equity Partners for years.
Yesterday Collins announced sales revenue was down 1.2% to $186.9 million, but that pro forma net profit after tax for the first half of the financial year was just $8 million – and that on a statutory basis, this results in a loss of $500,000.
Forecasts were little better, with Perkins noting that consumer uncertainty and market volatility make it difficult to produce a solid projection. However, “if current trends were to continue,” the business expects pro forma net profit after tax to be between $18-20 million for the full year – down from the original projection of $24.7 million in its prospectus.
The business saw its shares plummet 24% in just one day. Since its August listing, the business has seen its share price drop from $2.30 to $1.43, a drop of 37%.
Chief executive Kevin Perkins said in a statement the poor results are ongoing simply due to fragile consumer confidence, and a “highly competitive restaurant industry environment”.
Same store sales were flat for the KFC brand, and down by 4% for Sizzler, the announcement stated. The Brisbane-based company operates 119 KFC outlets, and 95 Sizzler outlets.
Despite the poor projections, Perkins said the company is continuing to invest in upgrades so the business will be ready to respond to better consumer demand.
“We also continue to focus on cost controls and operational excellence to ensure that we maximise benefits when trading conditions and consumer confidence improve.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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