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Local is lekker for Simbisa

By Staff Writer

Zimbabwe Stock Exchange-listed regional fast food group Simbisa Brands Limited (Simbisa)  has adopted prudential measures including procuring locally to hedge against currency risks which threaten viability in the various countries in the region in which it operates.

This comes as the Zimbabwe dollar, used in Zimbabwe where most of the group’s revenue comes from, has been on a slippery slope and authorities failed to avail the much needed foreign currency for industry forcing many to rely on the parallel market where rates are almost double

“Management remains vigilant of currency risks and has put in place mitigation strategies which include locally procuring capital expenditure, stock and expenses where possible and structuring borrowings in local-currency in all operating markets to minimise our exposure to US-dollar obligations and therefore hedge against adverse exchange rate movements” CEO Basil Dionisio said in his statement contained in the group’s annual report for the period to June 2021.

Despite these, the group remained resilient in Zimbabwe, opening 13 new counters between June 30, 2020 and June 30, 2021, to bring the total number of counters to  232.

Dionisio said continued foreign exchange shortages and multiple exchange rates being used in Zimbabwe created further operating challenges through the distortionary impact on suppliers’ and service providers’ pricing mechanisms and the effect on consumer disposable incomes and spending habits.

In Zambia, Dionisio said exchange rate pressures on cost of sales and operating costs were witnessed, but the group implemented rigorous cost containment measures in the financial year under review to improve operating profit margins and return the business to profitability, from a loss-making position recorded in the prior year period.

The group also has a presence in Ghana, Mauritius and Namibia.

In terms of financial performance, Simbisa’s revenue increased by 108% in inflation adjusted terms, with 60% growth in Zimbabwe and 318% growth in the region, compared to the prior year.

The group said the main driver of growth in Zimbabwe was an increase of 34% in average spend with customer counts increasing by 8%.

In the region, excluding the impact of the Zimbabwe dollar exchange rate depreciation, revenue increased by 5% in US$ terms from a 2% increase in the prior year.

Profit attributable to shareholders and headline earnings increased by 97% and 94% respectively in 2021.

Going forward Dionisio said, with the gradual easing of trading restrictions in operating markets, Simbisa expects an improvement in trading capacity and continued growth in customer counts to drive revenue growth.

“New revenue streams from an improved, more efficient delivery business will also underpin top line growth in the short to medium term. Continued cost management to maintain or make further traction in improving operating efficiencies will translate into increased profitability and shareholder returns,” he said, adding a strong investment pipeline, as the focus moves from navigating the Covid-19 induced challenges to growing the Group’s footprint, will also deliver growth and create value for stakeholders.

Dionisio said growth will be primarily focused in Zimbabwe, Kenya and Ghana. Other regional markets will focus on maximising returns on the existing capacity.

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