A Steers fast food outlet in Johannesburg. Steers falls under Famous Brands. File picture: Ihsaan Haffejee A Steers fast food outlet in Johannesburg. Steers falls under Famous Brands. File picture: Ihsaan Haffejee
Johannesburg - Famous Brands, which has recently been on an acquisitive spree, grew revenue 23 percent to R2.45 billion in the six months to August.
The listed casual dining company, home to well-known names such as Wimpy and Steers, also grew operating profit 17 percent to R404 million. Headline earnings per share – a key measure of profitability in SA – gained 71 percent to 411 cents.
However, its operating margin declined to 16.5 percent from 17.4 percent, mostly because of what it said on Monday was “a function of investment in resources to enhance operational capabilities, a higher percentage of joint-venture entities in the system, and the incorporation of lower margin manufacturing business”.
The company warns, with the integration of UK-based Gourmet Burger Kitchen’s 80 company-owned restaurants over the next period, softer margins are anticipated.
The group has bought 6 companies so far this year, expanding into food paste production, Italian dining and Mexican food, among other areas.
Famous Brands’ business comprises a portfolio of 30 brands represented by a franchise network of 2 626 restaurants across South Africa, the rest of Africa, the Middle East and the United Kingdom. These are underpinned by logistics and manufacturing.
CEO Darren Hele says the “pleasing performance delivered for the review period is a reflection of both organic and acquisitive growth in the brand portfolio as well as in the supply chain operations”.
Cash generated by operations before changes in working capital increased 19 percent to R457 million.
Net cash outflow from investing activities of R162 million, up from R117 million, was incurred mostly because the group bought controlling stakes in Salsa Mexican Grill, Lupa Osteria as well as Lamberts Bay Foods. Included in this outflow is capital expenditure of R90 million (2015: R36 million) incurred on the acquisition of the Cape Concentrate tomato paste facility, investment in IT systems, as well as further enhancing Supply Chain capabilities.
Hele explains the company has been expending to meet its growth targets, which has pushed gearing to a high level. As a result, no interim dividend has been declared, although – depending in future deals – dividends may resume in the 2018 financial year.
Hele anticipates solid growth over the next period.
IOL