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Fast food loving consumers can't repay loans

Johannesburg - Company results released on the JSE on Monday, show the double-edged sword consumers are experiencing at the moment.

On the one hand they seem unable to repay their loans. African Bank Investments [JSE:ABL] (Abil), for instance, reported non-performing loans which were R600m higher than had been expected.

This is compelling the lender to set aside R2.5bn more for future loans.

African Bank had aggressively pushed unsecured loans to the mass market but stubborn inflation, high levels of indebtedness and labour strife in the platinum mines have crippled the ability of many borrowers to meet their obligations.

Despite this situation consumers still seem to splurge on fast food and cheaper food sources like chicken.

Also on Monday, Famous Brands [JSE:FBR] reported its 13th consecutive year of record turnover and profit.

Its revenue increased by 12% to R2.83bn, while operating profit grew 21% to R566m.

Famous Brands owns brands like Wimpy, Steers, Debonairs Pizza, Mugg & Bean and Milky Lane.

"Value and quality will remain the key drivers of growth as cash-strapped consumers selectively spend reduced disposable income," said Famous Brands' group CEO Kevin Hedderwick.
 
During the period reported on 144 restaurants were opened locally and 181 were revamped.

The results of Astral Foods [JSE:ARL] - also released on Monday - showed an increase of 308% in headline earnings for the first half of the year and a dividend of 200 cents per share.

The company owns brands like County Fair, National Chicks and Tiger Chicks.

Pioneer Foods [JSE:PFG] with brands like Sasko, Spekko and Pasta Grande, also reported solid growth.

- Fin24

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