Cape Town - Nando`s Group Holdings,
the fast food chain, yesterday
issued a bold earnings forecast by
setting its sustainable growth
capacity in excess of 75 percent for
the financial years to February 28
2002 and 2003, and 40 percent a year
thereafter.
The statement accompanied
Nando`s results for the year to
February 29, which showed headline
earnings rose 21 percent to
8,1c a share and the renewed franchising
effort lifting operating
income 47 percent to R41 million.
Nando`s bullish forecast spiced
up sentiment yesterday, with the
share appreciating more than
15 percent to 37c on the JSE.
Punters previously expressed
reservations about the company`s
proposed scripfunded ``acquisition``
of Nando`s International - a
development that would see earnings
diluted to 2,83c a share in the
year to February 28 next year.
But market watchers remained
cautious. ``Don`t expect the market
to gorge itself on Nando`s when
investors know there are inherent
risks in expanding rapidly into
offshore markets,`` said one.
They also said Nando`s predicted
75 percent growth rates for
the 2002 and 2003 financial years
came off a lower base, using the
predicted diluted earnings of
2,83c a share for the year to February
28, 2001.
``This means that by 2003 the
company, now with a lot more
shares in issue, will actually be
earning between 8c or 9c, which is
roughly the same level as the 2000
financial year.``
Brian Sacks, an executive director
of Nando`s, said the company
hoped to earn half its revenue
offshore within two years.
He said that while only 10 new
stores would be opened in South
Africa in the financial year ahead,
the international store rollout
could top 50 stores.
``Growth internationally is becoming
exponential and this will
result in exponential earnings in
the years ahead. In the UK our 23
stores are already doing 50 percent
of the South African operation`s
turnover.``
Sacks said all of Nando`s international
operations, except Canada
and Israel, were profitable at
``country level``.
``Our Australian operations
notched up a loss of A$500 000
(about R2,03 million) last year but
we should turn in A$700 000 this
year with more to come when we
start franchising more outlets.``