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Famous Brands sizzles

Johannesburg - Despite constrained consumer disposable income, increased industry competition and continued inflation pressures, business at Famous Brands [JSE:FBR] remains robust.

Famous Brands this week posted a healthy set of results for the six months ended August 31 2013, with revenue up 16% to R1.38bn and operating profit up 23% at R154m.

Operating margin increased to 18.4% from 17.5% in 2012.

Chief Executive, Kevin Hedderwick attributes the strong performance to the Group’s vertically integrated business model and the deliberate strategy to provide a total food service solution across most LSM categories. 

“Our sought-after brands which are strategically populated across the South African landscape, with an ever-growing presence across the rest of Africa, continue to build a loyal following,” he says, “in the process driving the back-end of our business.”




Basic earnings and headline earnings both increased by 20% to 180c a share.

Cash generated by operations before changes in working capital increased by 22% to R271m.

Net capital expenditure of R29m was incurred on manufacturing capacity expansion and fleet replacement.

Borrowings of R117m stand at 4% of equity.

An interim gross dividend of 130c a share (2012: 108c) has been declared.

The Group’s footprint as at August 31 2013 comprised 2 180 restaurants across Africa, the Middle East, India and the United Kingdom.

Commenting on prospects, Hedderwick says, “Consumer disposable income will continue to be constrained, and competition amongst industry participants is likely to accelerate.  Margin pressure will remain a feature as fuel and food inflation continue to rise.  But, despite these factors, the food services category remains a robust one.” 

“Famous Brands is well positioned to capitalise on any available disposable income over the forthcoming period which includes the peak summer holiday trading period,” says Hedderwick.

“The Group’s brands are represented at all major consumer hubs, ranging from suburban shopping malls, casinos, coastal resorts and airports to national road transit sites and outlying rural areas.”



He adds, “The rest of Africa offers good growth opportunities as the shift from informal to branded food service offerings becomes entrenched.

"The Group’s recent investment in Nigeria exemplifies its conviction that this region will become increasingly significant to the business over time.”

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