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Enacy Mapakame Business Reporter

Listed fast food giant Simbisa Brands Limited’s business remained resilient in the third quarter to March 31, 2023 after achieving top-line and profitability growth despite the challenging operating environment, thanks to increased counters and customer count.

During the period under review, supply chain disruptions due to the war in Ukraine had an adverse impact on Simbisa’s markets for key raw materials. This, in addition to inflationary pressures and currency volatility experienced in its key market, Zimbabwe, adversely affects operations.

However, chief executive officer Basil Dionisio said the group was also implementing a robust operating strategy to respond timeously and proactively to overcome various challenges.

“The group continues to be impacted by the global food security risk stemming from the war in Ukraine, resulting in price increases in the business’s key raw materials.

“Global inflationary pressures have resulted in record-high inflation and currency volatility in our trading markets. Simbisa has remained resilient and continues to grow the business, despite the economic headwinds,” he said in a trading update for the quarter.

During the quarter under review, the total customer count for the group increased by 12,6 percent to 15,21 million from 13,51 million during the same quarter last year, in line with forecasts and driven primarily by new store growth.

Over the 9-month period, the group’s total customer count increased by 23 percent. The store count for the group increased from 524 on 31 March 2022 to 579 on 31 March 2023, an increase of 55 stores over the past 12 months. A net of 14 new counters were opened during the quarter from the last reported store count of 565 as at 31 December 2022.  

Despite the challenges experienced on the Zimbabwe market such as waning disposable incomes due to high inflation as well as erratic power supplies, the business remained resilient. “Despite the economic headwinds, the Zimbabwe operation continues to grow its footprint by opening 25 new counters over the past 12 months, including 6 new counters opened in the quarter under review to close the period with 275 counters as at 31 March 2023,” said Mr Dionisio.

Customer counts increased 19,9 percent year-on-year in the quarter under review and by 31,7 percent over the 9-month year-to-date (YTD) period as a result of new store openings and increased footfall in existing stores through successful promotional and value offerings.

Real average spend held firm between the quarter and prior year period increased marginally over the 9-month YTD period.

The delivery segment ended the quarter with total deliveries increasing 59,9 percent above prior year’s third quarter.

As for regional operations, soaring inflation levels and local currency devaluation impacted business operations, most notably in Ghana, where the cedi depreciated 56 percent against the US dollar between 31 March 2022 and 31 March 2023, albeit rebounding slightly in March 2023.

The group’s largest regional market, Kenya, was also impacted by political unrest in March 2023. However, customer counts in the regional business increased 4 percent over the 9-month period to 31 March 2023.

Kutuma Kenya grew total deliveries in the Kenyan market by 37 percent in the third quarter of financial year 2023 versus prior year. A total of 30 new company-operated counters and six franchised counters were opened between year on year on regional markets.

During the quarter under review, a net of 8 new counters were opened to close, with 304 company-operated outlets and 371 total outlets, including franchised regional operations, trading as at March 31, 2023.

Despite the challenges, the group will focus on consolidating its market share in its largest markets Zimbabwe and Kenya, which remains a priority through the roll-out of new stores whilst holding brands to the highest standard.

In the other regional markets, the group is committed to increasing returns on the existing infrastructure in the short to medium term. “The lessons and successes of this exercise will now be applied to Ghana and Zambia; this will entail changing the existing brand structure to enhance efficiencies and ensure adherence to brand standards and re-locating or, where necessary, closing under-performing sites,” said Mr Dionisio.