Simbisa Brands, a leading food franchise operator, faced significant economic challenges in Zimbabwe and Kenya, including transition problems in the banking sector following the introduction of the new Zimbabwe Gold (ZiG) currency on April 5, 2024.
The currency transition initially brought stability but was followed by teething problems that negatively impacted volumes in the last quarter, the Victoria Falls Stock Exchange listed company said in its 2024 annual report.
“The teething and transition problems experienced by the banking sector arising from the currency transition negatively impacted volumes in the last quarter,” chairman Addington Chinake said.
Simbisa Brands reported a 6% revenue increase for the year ended June 30, 2024, amidst significant economic challenges in Zimbabwe and Kenya.
The Group’s operating profit before impairment, depreciation, and amortization decreased by US$1.9 million (-4%), primarily due to the absence of non-recurring Treasury investment income, which totaled US$2.8 million in the previous year.
The group maintained its cash flow from operations, showcasing robust cash generation capabilities. Total comprehensive income rose by 6%, indicating preservation of shareholder equity.
The net impact of subsidiary disposals was US$0.08 million, comprising a US$5.9 million profit on disposal, partially offset by a US$5.39 million loan impairment provision.
The Board declared a final dividend of 0.392 US cents per share, payable on November 7, 2024, bringing the total dividend to 1.012 US cents per share.
Simbisa Brands plans to invest US$17.8 million in opening 36 new stores and revamping 36 existing ones in the financial year 2025. This investment aims to drive growth and strengthen market presence.
Chinake added that the group’s operations remained sensitive to fluctuations in exchange rates within the multi-currency basket. Additionally, the El Niño-induced drought affected raw material prices, such as soya and maize.
In Kenya, currency devaluation, flooding, and anti-tax riots disrupted business operations. Although the Kenyan shilling has stabilised since March 2024, the earlier depreciation strained consumer purchasing power and increased operational costs.
“In Kenya, the economic and political environment has been particularly challenging as this market experienced severe business disruption due to currency devaluation, flooding and extended anti tax riots.
“The Kenyan shilling has since stabilised and strengthened since March 2024, due to tighter monetary policies and easing global pressures on this market.
“However, this stabilisation followed a period of significant depreciation, which had already exerted considerable strain on consumer purchasing power and increased our operational costs,” the company noted.
Chinake expressed gratitude to the executive and management teams and employees for their dedication and hard work, reaffirming the group’s commitment to executing its growth strategy.
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