Simbisa Brands reports 2% decline in full-year profit despite expanding foot-print

ZIMBABWE – Simbisa Brands, a fast-food restaurant operator headquartered in Zimbabwe has reported a 2% decline in revenue for the year ended June 2020 to ZWL$ 9.39 billion (US$3.4 billion) from ZWL$ 9.24 billion (US$3.3 billion) registered the previous year.

The decline according to the quick service restaurants operator was driven by COVID-19 business disruptions in the last quarter of the financial year.

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During the period under review, the company’s operating profit increased to ZWL$ 1.29bn (US$466.85 million) from the corresponding period’s ZWL$ 1.03 billion (US$372.75 million), signifying a 25% rise.

Simbisa, which operates Chicken Inn, Pizza Inn, Creamy Inn, Galito’s Africa, Nando’s, Steers, and Vida & Caffe brands has an extensive footprint in Africa, with outlets in Zimbabwe and 10 African countries including Kenya, Ghana, Mauritius, Botswana, DRC, Malawi, Swaziland, Lesotho and Zambia.

Its regional operations outside Zimbabwe, registered 12.1% decline in customer counts.

In his home market, a sustained erosion of consumer spending power continued to impact the group in terms of reduced footfall and lower real average spend.

Customer counts in Zimbabwe dropped 33.7% year-on-year. Inflation-adjusted revenue for the period increased 8.9% to ZWL$3.57 billion (US$1.29 million).

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Despite the tough economy, the group continued to grow market share in the country with the opening of 14 new counters between 30 June 2019 and 30 June 2020 to close the year with 221 counters.

There are 17 new store openings in the pipeline for FY2021.

Regional operations registered 12.1% decline in customer count

Its regional operations outside Zimbabwe, registered 12.1% decline in customer counts.

Revenue generated by regional operations fell 7.3% year on year in USD terms and 7.1% in inflation adjusted Zimbabwean dollar terms from ZWL$6.11 billion (US$2.21 billion) to ZWL$5.67 billion (US$2.05 billion).

Regional EBITDA margins improved significantly from 7.0% in FY2019 to 19.7% in FY2020 on the back of improved operating efficiencies and implementing aggressive cost management strategies.

According to the company, Kenya remains the key growth market in the region and in the period under review 11 new counters were opened and a partnership was formed to drive growth in the delivery business segment.

A strong delivery partner was identified, and a partnership transaction consummated in the period which resulted in Dial-a-Delivery in Kenya being reconstituted as a separate company and operated independently from the QSR business, leveraging the partner’s expertise.

The partnership became effective on 1 July 2020, with Simbisa Brands owning 75% of the new business, Kutuma Kenya (Pvt) Limited.

Despite Kenya being a key market, its customer counts declined 12.5% versus prior year, weighed down by a 53.9% decline in Q4 due to the country-wide COVID-19 response which resulted in reduced trading hours and less footfall into the shops as customers were compelled to stay home.

Simbisa continues to grow its footprint in Kenya and closed the period with 152 counters. There are 16 new counter openings in the pipeline for FY2021.

“The focus in our other regional markets has been to streamline the business, defend our market position and ensure existing operations generate positive returns on investment,” said Simbisa Chairman, A. B. C. Chinake.

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