Updates

** Shares of Australian KFC operator Collins Foods' CKF.AX extend losses to a second day, down 3.1% to A$7.90, their lowest level since May 13

** Morningstar analysts say the company's Australia market margin growth is constrained due to competition and delivery costs

** Company posts a fivefold jump in FY net profit attributable to A$44.2 million ($30.58 million), but shares closed 2.5% lower after results were announced on Tuesday

** Morningstar said earnings met expectations, but EBITDA margins, which analysts expected would expand to 21%, have reset lower at ~19%

** It expects strong growth in lower-margin delivery sales to be a structural headwind in Australia

** Adds although benefits from rising sales and operating efficiencies may offset cost inflation and margin dilution, Morningstar no longer expects gross margins to recover meaningfully with competition constraining price hikes above inflation

** Notes "solid" Australian same-store sales growth so far in fiscal 2027; says weaker European sales likely reflect temporary factors such as geopolitics and unsuccessful limited-time offers

** Stock down over 23%, YTD

($1 = 1.4453 Australian dollars)