Fast-food group has reason to crow
NANDO’S, Chicken Inn and Steers tills are chiming for Zimbabwe-listed Simbisa brands which has counters in the country as well markets such as Zambia, Mauritius and the Democratic Republic of Congo (DRC) despite worsening economic conditions in the region.
Innscor Africa unbundled Simbisa and listed it separately in 2015 and it seems to be raking in the profits, with basic earnings per share for the interim period to December 2016 strengthening 2 percent to 0.86c after operating profits rose 3 percent to $10.4 million (R130m).
Challenges
The company, however, has said its potential remains curbed by the downturn in commodity-driven markets such as the DRC and Zambia as well as difficult economic environment and liquidity challenges in Zimbabwe.
“All (of this has) put significant pressure on our customers’ disposable income. Infrastructure and logistical challenges are also inherent in most of our markets, impacting on our cost structures,” said Simbisa chairperson Addington Chinake said.
Despite the challenges, the appetite for the group’s fastfood products that include pizza, chicken meals and burgers has remained strong.
Group income for the interim period solidified 3 percent to $79m. The company reported it grew its customer count 7 percent during the period compared to the previous comparable period.
But revenues fell 1 percent to $48.9m as a “result of an expected drop in average spend due to the challenging macro-economic environment”.
The Zimbabwe operations weighed in heavily on operating profits, contributing as much as $8.4m. This buoyed the group, which opened four new counters in Zimbabwe, bringing its store count in the liquidity-parched market to 193. Combined revenue from Kenya, Zambia, Ghana, the DRC and Mauritius firmed by 10 percent to $30.2m.
“Mixed results across the markets in this segment, however, have seen this segment contributing $2m to group operating profit.
“The prevailing economic challenges coupled with lost trading days due to political instability in the DRC resulted in a significant drop in that market’s contribution to profitability,” Chinake said.
In Kenya, eight new counters were opened during the period, bringing the total store counters for the region to 124.
Simbisa said the growth in Kenya had contributed 26 percent to group revenue.
It said the Zambian business, which has 37 outlets, faced low consumer spend owing to the suppressed commodity prices and the drought that cut earnings from the agriculture sector.
Despite all the challenges it faces, the appetite for the group’s fastfood products has remained strong.