INNSCOR Africa Ltd has exhibited significant cost containment measures by growing its pre-tax profit 2,3 times more than the corresponding growth in revenue, analysts said.
The conglomerate posted a pre-tax profit of US$24,7 million from revenue of US$255,5 million in the half year ended December 31.
Operating profit was US$25,9 while basic earnings per share were US$2,6c. The company declared a dividend of US0,6c per share.
“Considering the significant cash that Innscor generates, the group should actively optimise the same and reduce the temptation to grow the debt exposure that compromises future earnings and liquidity,” said economic analyst Brains Muchemwa. He added that continued expansion should bolster earnings significantly in the future considering domestic demand that is growing at a sustainable pace.
Economic consultant David Mupamhadzi said Innscor’s results were satisfactory considering that most companies are still recovering following the dollarisation of the economy. However, the market expects even better results in the second half year.
“For a company that generates a lot of cash better results are expected in the full year results,”he said.
Presenting the interim financial statements, Innscor chairman David Morgan said the group would continue with its expansion and refurbishment projects as it capitalises on the revenue and operating profit made.
The Innscor group, which has a market capitalization of US$349,2 million, has several divisions which include milling, manufacturing, distribution, fast foods and retail.
Milling and manufacturing incorporates Innscor Bread, Colcom Holdings Ltd, Appliance Manufacturing (Capri and WRS), Snacks, National Foods and Irvines.
The group’s distribution and wholesale division includes Innscor Transport, Distribution Group Africa and Spar Distribution.
Its retail Silo incorporates Spar stores, fast foods and TV Sales and Homes.
The export division incorporates Shearwater, Bakaya Hardware and Niloticus Retail Silo reported a revenue of US$85,3 million with profit tax amounting to US$6,4 million.
The milling and manufacturing Silo achieved a revenue of US$62,9 million. Its profit before tax amounted to US$10,4 million.
In the period under review, Innscor unbundled its crocodile farming unit, Padenga Holdings which listed separately on the Zimbabwe Stock Exchange in November.
Morgan said the group’s manufacturing division, Silo will focus more on core operations and investment into new technology will continue at National Foods, Irvine’s, Colcom and the bread plants.
He said operations in Zambia which include the Spar Corporate store, retail operation and the distribution reported revenue for the period of US$34,1 million and a profit before tax of US$1,5 million.
The group’s regional fast food operations consist of counters in Kenya, Ghana, Zambia and Senegal and the regional franchising arm where Nigeria is Innscor Africa Ltd’s largest franchised market.
“This will increase improve long-term quality as well as secure the ability to grow volumes in future,” he said.
“In the retail Silo, the aggressive expansion programme will continue in the fast food operations and in addition, product ranges will be enhanced in line with market demands and international trends,” said Morgan.
He said the fast food operation will continue to roll-out additional counters in Zambia, Kenya and Malawi as they capitalize on the group’s strong brand, which has been built in the region since 1998. — Staff Writer.
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