Johannesburg - Food services company Famous Brands on Wednesday reported that its headline earnings for the year to end February 2009 increased 11% to 159c from 144c the year before.
The group said satisfactory increases in revenue were recorded
across all of the operating business units and enhanced by strong growth in the logistics division.
Revenue grew by 30% to R1.5bn in the period from R1.2bn a year ago and operating profit was lifted by 20% to R262m from R217m in 2008.
This resulted in an operating profit margin of 16.9%.
Famous Brands chief operating officer Kevin Hedderwick said the
decline in the operating margin as "due to both the deliberate margin absorption strategy within the manufacturing division and a 41% increase in revenue in the low margin logistics division where activities were expanded substantially to take on the Wimpy business."
A final dividend of 40c per share was declared, taking total
dividends for the year to 76c per share, an increase of 15% on
the 2008 distribution to shareholders of 66c per share.
Famous Brands is Africa's leading quick service restaurant and casual dining franchisor and is also represented in the UK.
The group's global footprint now stands at 1 602 franchised restaurants spread across South Africa, 17 other African countries and the UK.
Its brand portfolio includes Steers, Wimpy, Debonairs Pizza,
FishAways, House of Coffees and Brazilian Café.
"In the period under review some of the challenges faced in the domestic market included lower disposable income from higher interest rates, spiralling food inflation and hikes in the price of petrol and diesel as well as raw materials," the group said in a statement to the JSE.
Like-on-like sales growth (net of new restaurant openings) in the domestic franchising division grew by 9%, with system-wide sales increasing by 14%.
Revenue increased by 15% to R299m with an operating profit increase of 31% to R186m.
During the year a total of 120 new restaurants were opened and a
further 101 existing restaurants were revamped.
Internationally, the business in the UK was impacted by the
deepening recession.
The division recorded a 4.1% drop in revenue in Sterling terms but in rand terms, revenue was up 2.5% to R180m.
Operating profit fell by 12.1% to R17m recording some
benefit from the weaker rand but offset by retrenchment costs of R2.7m.
The manufacturing division was impacted by the deliberate margin
absorption strategy to protect retail turnovers and franchisee
profitability.
The division recorded revenue of R568m and operating
profit of R42m, resulting in a margin of 7.3%.
"A number of structural and organisational changes have been brought about within this division, which we are confident will in the new year, see this business deliver on it's potential," said Hedderwick.
The logistics division embarked on an expansion drive, which
resulted in revenue growth to R977m and an operating
profit of R23m.
Looking ahead, Hedderwick said economic conditions are not
expected to improve and indications are that consumers will
experience greater financial strain with relief from interest rate cuts being directed at settling debt.
Towards the end of 2008, the group issued a cautionary
announcement in relation to a proposed transaction but the group said this has been temporarily postponed until there is greater clarity surrounding prospects for the domestic and global economy.
- I-Net Bridge