African Sun profit up 672pc
Enacy Mapakame Business Reporter
Hospitality group, African Sun Limited, reported earnings growth for the half year to June 30, 2018 as operating profit surged 672 percent to $3,8 million on good business during election period.
Revenue rose 29 percent to $27 million buoyed by increased volumes at its hotels.
Basic earnings per share increased 1 700 percent to 0,36 cents from 0,02 cents in the comparable prior year period.
During the period under review, Zimbabwe witnessed an increase in foreign arrivals as observers from all over the world flocked the country to observe the election. The election campaign period was generally peaceful, and economists have said this should continue boosting investor confidence across sectors of the economy during the remainder of the year and going forward.
Domestic and foreign revenue growth was 26 percent and 32 percent respectively.
Key source markets, especially Europe, Asia and United States of America played a critical role in the growth of arrivals, all on the back of global tourism resurgence.
“There was a remarkable increase in volumes across the hotels, with city hotels benefiting significantly from elections, conferencing and corporate related business whilst Victoria Falls area hotels benefited from increased foreign arrivals,” said African Sun in a statement accompanying the group’s financial results.
“This positive trend was achieved despite the constrained macro-economic environment emanating from unresolved liquidity and foreign currency shortages.”
Occupancy level increased 10 percent to 55 percent, which helped boost revenue growth. Average daily rate also increased 9 percent to $97.
African Sun said the occupancy growth was driven by a strong performance from all the markets, with room nights sold for domestic, international and regional increasing by 16 percent, 26 percent and 22 percent respectively.
This resulted in revenue per available room (“RevPAR”) increased by 33 percent to $53 from $40 achieved in the same period last year.
Finance costs declined by a notable 33 percent to $0,33 million from $0,49 million due to loan repayments and lower average borrowing rates. Total assets remained almost flat at $38 million.
In the outlook, African Sun is upbeat of maintaining the growth trajectory as the sector enters its peak period- festive season.
“The remaining trading period falls into the Group’s peak trading season. We expect conferencing and international market business to drive performance. The Victoria Falls properties should continue to experience growth in foreign arrivals,” said African Said.
Bookings for the remainder of the year are already higher than same period last year while various infrastructure projects around the country, including upgrading of Robert Gabriel Mugabe International Airport, the Beitbridge to Chirundu road rehabilitation and Beitbridge border post development will bring business opportunities for the group.
Management will therefore continue to focus on revenue generation and cost reduction initiatives to navigate the current challenging business environment, leveraging regional and international brands and their respective loyalty programmes.
The group declared an interim dividend of 0,0581 cents a share.