Did Collins Foods’ FY25 Earnings Truly Align With Market Expectations?

Context of ASX Inquiry

Collins Foods Limited (ASX – CKF), a major player in the consumer discretionary sector focused on restaurants and food services, recently responded to a detailed ASX request for information following its FY25 results announcement. The ASX sought clarity on whether any statutory or underlying earnings measures materially diverged from market expectations, given the notable share price movement after the results release.

Earnings Performance and Market Expectations

CKF confirmed that its FY25 financial outcomes did not materially differ from market expectations, referencing both its own guidance and analyst consensus. While the company had not provided full-year NPAT, EBIT, or EBITDA guidance, it had issued margin and cost guidance in December 2024. Actual underlying EBITDA margin came in at 15%, slightly above the top end of the 14.2%–14.7% range, and underlying EBIT margin was 7.7%, also above the guided 6.8%–7.3% range. These positive variances, however, were not deemed material by CKF.

Analyst consensus, based on forecasts from 13 sell-side analysts, showed CKF’s revenue slightly below expectations by less than 1%, but underlying EBITDA, EBIT, and NPAT exceeded consensus by 4.5%, 8.3%, and nearly 15% respectively. Despite these positive differences, CKF maintained that none crossed the ASX’s materiality thresholds requiring earlier disclosure.

Impairment in Netherlands Portfolio

CKF had previously flagged a partial impairment of its Netherlands restaurant portfolio, estimating a non-cash charge between $25.5 million and $32.7 million. The final impairment recorded was $36.4 million, exceeding the upper guidance by 11.3%. CKF emphasized that this impairment is a one-off, non-cash item and does not reflect the underlying earnings potential of the business. This explanation underpinned their view that the variance was not material in the context of market expectations.

Compliance and Disclosure Practices

The company reiterated its adherence to ASX Listing Rules, particularly continuous disclosure obligations. CKF’s Disclosure Committee and Board closely monitored financial performance throughout the year and during the audit process, finalizing results on 23 June 2025 before releasing them on 24 June. CKF confirmed no earlier announcements were warranted as no material surprises were identified prior to the results release.

Market Reaction and Outlook

Following the results release, CKF’s share price rose significantly, from $7.26 to a high of $9.15. While CKF did not attribute this movement to any single factor, it pointed to a positive FY26 outlook, including early trading updates showing strong same-store sales in Australia and Germany, and strategic growth plans in Europe. The company targets low to mid-teens percentage growth in underlying NPAT for FY26, supported by operational improvements and cost management.

This combination of solid FY25 results, strategic clarity, and optimistic guidance likely reassured investors and contributed to the share price uplift.