Simbisa reports US$146m interims revenue

VICTORIA Falls Stock Exchange listed entity, Simbisa Brands, says revenue for the six months to December 31, 2022, increased by 24 percent on the back of increased customer count in Zimbabwe and in the region.

In a statement accompanying the Group's financial results for the six months to December 31, 2022, chairman Addington Chinake said revenue had increased by 31 percent in Zimbabwe and 12 percent in the region.

The half year results are the first set of half year results for the Group as a Victoria Falls Stock Exchange (VFEX) listed company and also the first in US dollars.

Simbisa delisted from the ZSE and listed on the VFEX which trades in US dollars and requires listed firms to report their financials in US dollars as well as declaring dividends in US dollars.

Simbisa believes reporting in a stable currency will enhance the usefulness of the financial statements to the Group's stakeholders.

Revenue for the period under review increased by 24 percent to US$146,1 million up from US$117,4 million.

Profit before tax for the six months grew 36 percent to $27,7 million up from $23,2 million.

Profit after tax amounted to US$18 million up from $12,4 million.

Headline earnings per share were up 22 percent to 2,73 US cents and the Group declared a dividend of 0,88 US cents for the half year. This is up 31 percent from the comparative prior year.

The results were achieved in a period where the Group opened 46 new counters between 31 December 2021 and December 31, 2022 to close with a total of 631 counters.

This resulted in organic growth in customer counts, which increased 28,9 percent year-on-year.

The Group continued to expand its footprint in Zimbabwe by opening 30 new counters between 31 December 2021 and 31 December 2022. This expansion drive resulted in a 38.4 percent increase in customer counts in half year to December 31, 2022 versus the prior year.

Real-term average spend increased 6,8 percent year-on-year including increased contribution from deliveries with inherently higher average spend.

The drive to increase delivery capacity through the scaling up of operations has been successful, with the total number of deliveries and revenue per delivery increasing 54 percent and 34 percent, respectively, in half year to December 31, 2022 versus prior year, despite generally depressed consumer income levels in the market.

Customer counts in the regional business increased 8.3 percent in half year to December 31, 2022 versus prior year, on the back of new store openings and the resumption of trading at full capacity in Kenya, versus the prior year period in which the market's trading hours were 13 percent below capacity.

Despite local currency devaluation against the US Dollar, the Group's pricing strategy resulted in firmer real average spend across all Regional markets, except for Ghana, where real average spend fell year-on-year due to the sharp depreciation in the local currency.

Regional US Dollar Average Spend increased by 3.8 percent in in half year to December 31, 2022 versus prior year comparative.

Chinake said regional deliveries continued to be impacted by reduced consumer disposable income due to economic hardship.

"Total deliveries in the region dropped 14 percent year-on-year, and the contribution of Net Merchandise Value from deliveries to Regional Turnover fell from 18 percent in half year to December 2022 to 15 percent in half year to December 31, 2022."

Chinake said growing the Simbisa brand footprint was a key focus area in the period under review, and between December 31, 2021 and December 31, 2022, a net of 35 new counters were opened in the region.

Going forward, the Group has a substantial investment pipeline, with 48 net new counters set to open in the six months to June 2023 and a further 103 sites identified for the full year to June 2024.

Of these, 10 will be in the casual dining sector. An additional 27 casual dining stores are in the pipeline for the full year to June 2024.

Chinake said the top-line benefit of increasing the casual dining segment of Simbisa's brand portfolio is two- fold: "firstly, through broadening our reach of customers in the upper LSM segment and secondly, through attracting a higher Average Spend".

This is expected to drive growth and unlock shareholder value.

According to Chinake, the primary growth markets in the short to medium term will be Kenya and Zimbabwe.

"However, the Group remains vigilant of new growth opportunities in existing and potential new markets and continues exploring business development options."