Simbisa reports 23pct drop in profit

Simbisa reports 23pct drop in profit

HARARE, September 27 (The Source) – Simbisa Brands on Tuesday reported a 23 percent drop in after tax profit at $3 million for the nine months to June 30 2016 compared to $3,9 million in the prior period last year after regional operations performed below expectations.

Simbisa is a separately listed Quick Service Restaurant unit of Innscor Africa Limited with operations that span across 6 African countries. It recently entered the Mauritian market but group performance is largely anchored on Zimbabwe’s operations.

Its financial year started from October 1 after unbundling from Innscor, but has adopted a June 30 year end.

Simbisa Brands chief executive, Basil Dionisio told analysts this afternoon that the group’s brands have remained strong despite adverse trading environments in the markets it operates in.

“We are growing in store coverage and we believe Simbisa is set to provide compelling shareholder returns over the long run. In the past financial year alone, our net growth in counters was 56 across all our markets taking store count to 414,” he said.

Group revenue for the period declined five percent to $108,3 million compared to $114 million same period in 2015 largely as a result of loss of value in regional currencies against the US Dollar which is the company’s accounting currency.

Zimbabwe’s operations contributed 62 percent to total revenue at $67 million while regional operations came in at $41 million. Locally the group has 188 counters and 196 counters in the region.

Dionisio said during the period, the group introduced new innovative products across the major brands and is consistently re-engineering the menus so that they appeal to the ordinary citizen in order to counter the expected drop in average spend.

During the nine months, Simbisa opened seven new counters in Zimbabwe but said new store roll-outs will be limited to locations with potential of achieving average profitability margins.

In the region, operations in Kenya, Zambia, Ghana, DRC and Mauritius contributed 38 percent of group revenue but unfavourable foreign currency movements against the USD continue to affect earnings.

Regionally, Simbisa opened 17 new counters in Kenya which is the second largest market after Zimbabwe. The company also opened seven new counters but closed five in Ghana to bring total in that country to 20 while 13 were opened in Mauritius.

In DRC, Simbisa has 10 counters after opening two in the period under review.