Listed South African fast-food franchise group Famous Brands has reported a 22% increase in headline earnings per share to 51,8 cents for the six months ended August 31 from 42,7 cents for the comparable period last year.
Gross revenue for the period increased by 33% to R406,3-million from R304,9-million in the prior period, while attributable profit jumped 23% to R45,4-million from R36,9-million at the interim stage in 2005.
In lieu of a dividend, Famous Brands proposed a capital distribution of 18 cents per share, up from 2005’s 13 cents per share.
Commenting on the results on Monday morning, Famous Brands described the results for the period under review as “satisfactory”.
It said sustained growth of its target market, pursuit of lifestyle convenience and steadfast demand for the group’s best-in-class brand offerings contributed to the performance
“Interest-rate and fuel-price increases cooled consumer sentiment to some extent, but not sufficiently to dampen large-scale demand for the group’s products. With average spend per head at approximately R30, the group’s brands, by virtue of their value-for-money positioning, are typically less susceptible to adverse economic conditions than competitors offering higher-value meal options,” it said.
Looking ahead, Famous Brands said it is optimistic that consumer spending over the peak holiday period will remain strong.
“The group is well positioned to capitalise on positive trading conditions during this period based on its representation in popular shopping malls, on major transit routes, in coastal resorts and at national airports,” it said.
This bullish short-term outlook is tempered by a cautiously optimistic view of the longer term.
“Further interest-rate increases will reduce disposable income and serve to dampen the prevailing buoyant sentiment, and compound growth at the group’s current levels will be challenging.
“Notwithstanding these factors the group is satisfied that it will continue to benefit from the cornerstones of the business: aspirational, value-for-money brands supported by a growing target market and evolving social trends which favour convenience and out-of-home consumption.”
“The key challenge for the group in the next six months will be to extract value afforded by recent capital expenditure. With continued focus on improvements in efficiencies and margins, the group should succeed in achieving its proposed targets for the full year and deliver results in line with the prior comparative period.” — I-Net Bridge