HomeBusiness DigestInnscor earnings increase by 59%

Innscor earnings increase by 59%

In a statement accompanying the company’s interim financial results, Innscor said its performance was buoyed by momentum gained in the previous period where volume growth and improved efficiencies were recorded in a number of their operations.

Operating profit for the period totalled US$38,3 million, up from US$25,8 million in the prior period, on the back of improved profit margins to 12% in the period under review, from 10% in the comparable period.

Because of its nature of businesses, Innscor’s cash generation ability remained strong and managed to attain US$27 million from their operating activities. The disposal of their 37,8% stake in Natfoods Ltd enabled the group to embark on expansion projects across the group.

Innscor posted a profit for the period of US$27,6 million and declared an interim dividend of US0,75 cents per share.

The conglomerate which runs bakeries and fast food outlets in the country and the region registered increased volumes in their operations.

The bakery operations recorded a 60% increase in volumes after the company commissioned a new plant in Harare in November 2011 and upgraded the existing line in Bulawayo to produce the current capacity of 400 000 loaves a day.

A third line expected to be commissioned in Bulawayo in September 2012 would further boost production to 500 000 loaves a day, the company said.
The line of bakeries is a cash cow to the group given that at current prices of a loaf of bread averaging US$1, the company generates cash in a day more than what other industries can in a single month.

The demand for bread will remain strong given the current population of around 15 million and the company can install more capacity to increase its market share. With its main competitor, Lobels, still facing viability problems, Innscor can easily become a market leader.

In Zimbabwe, the fast foods outlets registered an 8% increase in customer count after the company opened 8 new counters in Harare and 2 more around the country. A number of fast foods operations sprouted during the period including the Chicken Slice stable and the contentious Chickenza Inn, which Innscor is currently litigating.

Innscor had for a long time enjoyed monopoly in the fast foods business.

The new entrants will impact on the conglomerate’s market share as customers would want to experiment on new offerings, an analyst said.

The company can survive the competition by repositioning itself above its competitors aided by brand loyalty.

in the region, the fast food outlets recorded a 13% increase in customer count despite a closure of four counters in Kenya.

The group also recorded increase in volumes across its other operations which include Distribution Group Africa, Spar, Natfoods, Colcom, TV Sales & home and Capri.

The company said that it would continue to grow its earnings base, improve profit margins and also the generation of free cash flow from operating activities.

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