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Monday, 20 May 2024 19:26

Restaurant group Famous brands profits decline for 2024 financial year.

By Lehlohonolo Lehana.

Famous Brands reported 6% decline in operating profit and 5% slump in headline earnings per share (Heps) for the year ended 29 February 2024 on Monday.

Despite the group's carefully managed cost base, the operating profit margins were negatively impacted on by input cost pressures and increases in overheads, namely electricity, water, diesel, repairs, maintenance and employee costs.

Despite these pressures, the group paid a final dividend of R3.02 a share to maintain attractive shareholder returns.

"While we carefully managed our cost base, operating profit decreased by 6% to R812 million [2023: R861 million] and operating profit margin was 10.1% [2023: 11.6%]. Heps declined by 5% to 465 cents [2023: 488 cents], and basic earnings per share [Beps] declined by 13% to 457 cents [2023: 523 cents]," Famous Brands said in its Sens results release on the JSE.

Excluding the liquidation dividend, the adjusted operating profit margin was 10.6%, and BEPS was R4.48 for February 28, 2023. Based on this calculation, Famous Brands pointed out, its BEPS of R4.57 for the 2024 financial year was actually 2% higher year-on-year.

"During our financial year, South Africa grappled with its most severe power cuts on record. The rand was volatile and inflation, particularly food inflation, continued to climb.

"Consumer household spending was under immense pressure, while operating costs at the restaurant level were on the rise. Our management team, who are well-versed in navigating difficult environments with significant inflation, steered us through," Famous Brands CEO Darren Hele said. 

The brands division, which houses the group's 16 restaurant brands such as Steers, Debonairs Pizza, Wimpy and Mugg & Bean, saw revenue increase by 5% to R1.2-billion, up from R1.1-billion a year ago. The improvement is owing to growth in the number of restaurants and higher restaurant turnovers, resulting in higher franchise fees.

The group said it will implement its Leading Brands restaurant rollout, which includes boosting its drive-thru presence as new sites become available.

The group will also invest further in consumer-facing technology and improve its own home delivery capability.

In the medium term, we will evaluate opportunities to divest from non-core assets. We seek optimal disposal options of such assets to unlock value for shareholders," said the group.

"In 2025, we are planning to optimise our Logistics footprint. This final phase includes relocating our cold storage facilities from Crown Mines to our redeveloped and fit-for-purpose Midrand Campus.

"Furthermore, our focus now turns to delivering a similarly significant project in our Manufacturing division. Our plants are ageing, and some need to be refurnished or even relocated. We are also exploring exciting manufacturing technologies that will offer us a competitive advantage.