eBusiness Weekly
Michael Tome
VICTORIA Falls Stock Exchange Listed (VFEX) listed Simbisa Brands says average spend increase and new stores rollout spurred its half-year performance to December 2023.
This is so, the said, despite weakening global growth, climate change induced food insecurity and heightened geo-political tensions in Eastern Europe, which caused global supply chain disruptions.
Locally, the second half of 2023 started with a relatively stable note but the situation later deteriorated which was seen through massive acceleration in exchange rate disparities and devaluation of the local currency.
This saw galloping inflation levels, which led to a great sentiment of uncertainty in the business circles, a position that hampered planning and piled pressure on consumer cost of living and spending habits.
In that same regard, Simbisa’s customer count was seriously subdued increasing only by 1 percent compared to the prior year attributable mainly to limited consumer disposable incomes.
However, Simbisa Brands Group Chief Executive, Basil Dioniso, said the average spend increased 9 percent compared to the same period in 2022, attributable to an aggressive expansion drive which saw the food restaurant chain opening 31 counters in the period between December 2022 and December 2023.
Twenty of them were commissioned in the second half of 2023.
This undoubtedly widened the group’s reach and service delivery across the country, as the total number of deliveries increased 24 percent in the first half of 2024 against the same period in 2023.
“The Zimbabwe operations achieved revenue growth of 10 percent for the half year period under review, largely driven by an increase in average spend, which increased 9 percent versus the prior year, and new store rollouts.
“Customer count growth was subdued, increasing just one percent in the first half of the 2024 financial year versus the prior year, a result of the challenging operating environment putting pressure on consumer disposable incomes,” said Dioniso.
Going forward, Simbisa Brands indicated that it remains focused on growing its revenue base from delivery channels through expansion in the number of stores and geographical reach to as many customers as possible.
Simbisa said 27 additional counters will be added in the second half of the 2024 financial year.
This is expected to be compounded by an intensive marketing plan and value offerings aimed at countering the decline in customer spending power without compromising gross profit margins.
Innovation is expected to play a vital part in Simbisa’s growth plans given the introduction of the Chicken Inn and Pizza Inn apps in January 2024, which are expected to improve brand visibility.
Simbisa operated not without challenges as the group was not spared from the exchange rate disparities and inflationary pressures in the period under review.
“The monetary authorities are expected to take measures that will stabilise the currency and rein in inflation.”
Simbisa Brands performed remarkably well in the period under review, in spite of the operating challenges as the group realised a 7,4 percent revenue increase to US$147 million compared to 2023’s US$137 million.
The group’s operating profit closed the period under review at US$24,7 million from US$20 million translating to a 22 percent growth.
Net cash flow from operating activities continuing and discontinued operations grew to US$15,2 million, 20,3 percent ahead of US$12, 7 million realised in the comparable period last year.
In terms of operations in the region, the group acquired its second-largest franchised market in Eswatini, following the previous franchisee’s decision to exit the business.
On the other hand, a position was reached to convert Zambia, Ghana and Mauritius from company-owned status and operated subsidiaries to third-party franchised businesses, effective from October 1, 2023.
This strategic decision was reached after these markets contributed only six percent to the overall group revenue, negatively contributing to the group’s operating profit.
