Simbisa lauds favourable working environment
Zimbabwe’s largest quick service restaurants (QSR) group, Simbisa Brands Limited’s performance for the half year to December 31, 2021, recorded significant growth on the back of a favourable operating environment across markets.
The period under review witnessed improved operating hours on gradual easing of Covid 19 induced lockdowns that resulted in an increase in customer counts while increased delivery and currency stability also paid dividends for the group.
Total revenue for the period rose 54 percent to $16,9 billion compared to $11 billion recorded during the same period in the prior year on a strong rebound in customer counts despite limitations in trading hours and other restrictions.
In USD terms, revenue generated by regional operations increased by 36 percent mainly from a 28 percent increase in customer counts.
According to Simbisa, the Group recorded a net monetary gain of $267 million from $239 million in the comparable period reflecting robust inflation hedging strategies in Zimbabwe.
Foreign currency translations favourably impacted profit by $2billion. Profit attributable to shareholders and headline earnings increased by 75 percent and 68 percent respectively.
“Organic growth in the six-month period under review resulted in a recovery in customer counts, which increased 21 percent in 1H FY2022 versus prior year. Increased delivery contribution, with total deliveries up 53 percent year-on-year, together with currency stabilisation in our regional operating markets, translated to firmer average spend.
“Continued cost management and currency stability have supported real operating margins and translated top-line growth into improved profitability and shareholder returns,” said chief executive officer Basil Dionisio in a performance update for the half year period.
In Zimbabwe, the business continued to be significantly impacted by Covid-19 trading restrictions, as trading hours during the second quarter were 37 percent below normal counter trading hours.
Seating restrictions and curfews also remained in place throughout the period under review. However, customer counts grew 18 percent year on year on the back of ongoing promotions and value meal offerings as well as steady growth in footprint, deliveries, and collect orders.
Increased focus on the delivery segment continued to bear fruit, with the total number of deliveries increasing 62 percent during the half year period.
In Zambia, positive post-election sentiment in this market resulted in an appreciation of the Kwacha against the US Dollar which improved margins through a reduction in major imported raw material costs as well as US Dollar-denominated rentals.
Aggressive marketing and brand specific promotions to improve customers counts have been successful and Simbisa Zambia achieved a 19 percent year-on-year increase in customer counts against the prior year period.
Local currency average spend increased 12 percent resulting in a 33 percent increase in local currency revenue and a significant 50 percent increase in US Dollar revenue versus prior year.
Local currency average spend in Kenya increased 4 percent during the period versus prior year, supported by increased delivery contributions. As a result, revenue grew a healthy 40 percent year-on-year in local currency terms and 37 percent in USD-terms.
Increased procurement costs in Mauritius and Ghana put gross profit margins under pressure in the two countries.
However, an 8 percent improvement in average spend in Ghana during the half year period resulted in this market achieving a 67 percent year-on-year increase in revenue in local currency terms and a 64 percent increase in real terms.
With an easing of Covid-19 operating restrictions, Simbisa has improved trading capacity in most markets resulting in customer footfall into the shops, which has also made a marked recovery.
Dionisio said the group has now shifted from a defensive operating strategy to focus on growth evidenced in the marked acceleration in profitable, new store openings.
He said: “With the gradual easing of trading restrictions in our operating markets and resultant improvement in trading activity, there has been a recovery in customer counts which is expected to boost top line growth in the short to medium term.
“Considerable effort has been put into managing our cost base which has seen an improvement in group operating margins in real terms. Thus, a recovery in revenue will translate to growth in profitability and improved shareholder returns and value delivery.”-eBusiness Weekly
