Simbisa records $108m profit

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SIMBISA Brands (Simbisa) recorded a profit of $108,29 million during the six months ended December 31, 2019 from $87,27 million in prior year after a bump in its revenues.

Revenue was up 101 percent to $1,272 billion during the review period from $633,67 million in previous period while profit attributable to shareholders and headline earnings increased by 24 percent.

Simbisa said dampened consumer demand in Zimbabwe presented the greatest challenges to the country’s operating environment along with currency devaluation, hyperinflationary pressures, an ongoing acute electricity crisis.

Basil Dionisio Simbisa’s group chief executive however said the group remained resilient and continues to improve performance in the existing business whilst also growing market share through organic growth across all markets.

The listed fast-food retailer’s operations span from Zimbabwe into the region where it is targeting to increase share of the market.

“Compared to Zimbabwe, the operating context in our regional operations was relatively stable. However, local currency volatility remained the main challenge. Across all of our regional markets, the respective local currencies depreciated against the US dollar in the six-month period versus prior year, with notable devaluations experienced in Zambia and Ghana,” he said.

He said the focus in regional markets will be to defend market share and ensure existing operations generate positive returns on investment.

“Despite economic headwinds in Zimbabwe, proactive management strategies have been put in place to ensure that Simbisa will continue to create value for stakeholders. Management remains focused on hedging against inflation and currency volatility as well as growing the business through a measured expansion strategy, as outlined in previous communication to stakeholders,” he said.

“An optimal capital structure will be established to execute the latter and will involve further leveraging the Zimbabwe balance sheet. With the turnaround of the existing business performance well on track, we are turning to an organic growth strategy in our Zambian and Ghanaian businesses.”

The group’s significant cash flow items include expansion capital expenditure of $96 million mainly towards new stores in Kenya, Zambia and Zimbabwe.

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