BY MISHMA CHAKANYUKA
ZIMBABWE’s largest fast-food group, Simbisa Brands posted an increase in profit after tax of $16,5 million from US$7,9 million for the half year ended December 31, 2018 despite operating in a tough trading environment.
The company’s revenue for the period under review increased 44% to $143,2 million with 40% of the growth being contributed by existing stores, the rest came from 20 new stores, opened during the period.
Operating profit for the group was up 82% to $27,4 million, while the profit attributable to the owners of Simbisa increased 99% to $16,2 million.
Simbisa Brands chairperson, Addington Chinake said the group’s business continues to generate cash which was being utilised in investment activities.
“Our business remains highly cash generative achieving cash generated from operations (after changes in working capital) of US$26 million. Total cash utilised in investing activities of US$8,9 million was incurred, mainly for expansion initiatives in Kenya and Zimbabwe,” Chinake said.
Chief executive Basil Dionisio said Zimbabwe’s economic challenges, which include a foreign currency deficit and inflation pressures, had impacted the business for the six months under review.
“As aforementioned, the economic instability in Zimbabwe presented a series of challenges during the period under review. Persistent foreign currency shortages, inflationary pressures and the 2% transaction tax that was introduced in October 2018 have increased the cost of doing business,” Dionisio said.
Operations in other regional markets continued to support the group’s business performance as the macro-economic conditions have remained stable.
In Kenya, he said business operations have benefited from a stable Kenyan Shilling.
The group opened additional seven counters in Kenya which contributed 2% to revenue growth and closed the period with 130 counters.
Operations in the Zambian market were negatively impacted by the exchange rate movements, Dionisio noted.
“Revenue growth across existing counters increased 13% year-on-year in local currency terms, however during the period under review the average exchange rate of the Zambian Kwacha against the US dollar depreciated by 18% compared to the prior comparable period, resulting in a 4% year-on-year decline in same-store revenue in US dollar terms,” he said.
In Ghana, changes to the Value Added Tax impacted the business through a 5% increase in cost prices and import duties which exerted pressure on consumer spend.