HARARE: Innscor Africa’s revenue for the period July 2015 to date is 5 percent down largely due to the drop in average selling prices and an investment in raw materials. Chief executive Antony Fourie told the AGM last Friday that revenue is “increasingly hard to come by due to more competition coming through aggressively” but the group would focus on maintaining volumes and market share.
“Keeping the volumes up is critical for us notwithstanding falling revenues. We had to reduce prices to maintain our volumes and minimise the effects of the economic environment on our revenues,” he said. Mr Fourie said revenue at 5 percent down is almost at similar levels with the decline recorded at year-end of 6 percent.
The same rate of decline (5 percent) is expected at year end. In the period, volumes for the group’s business had recorded increases except retail. Unit sales declined at Spar Zambia, TV Sales and Home as well as Transerv. Margins are up 115 percent better than the 36 percent reported last year.
In terms of sectoral performance, Logistics and Distribution revenue was up 6 percent primarily driven by an increase in the volume of new clients. Mr Fourie said the Retail business was the worst performer, going down 9 percent after the closure of selected stores but the results of this strategy are now visible.
The QSR business, which recently unbundled to Simbisa Brands is flat on last year and Light manufacturing is down 2 percent. “With the exception of Logistics and Distribution all our businesses have been able to gain on margins through better procurement. Some of the investments we made last year are beginning to show results,” he said.
Mr Fourie said the group managed to contain costs at the same level as last year and hopes to lower them at year-end. Costs went down 14 percent in distribution, retail 5 percent while light manufacturing flat was flat.
Mr Fourie said the group has been investing quite intensively in all businesses and this had resulted in a 5 percent increase in gearing up at above $19 million . . . “ but this is money well spent”. He said the money was used for the acquisition of Transerv, raw materials investment for Nationals Foods which acquired maize for three months and Irvines.
Mr Fourie said capex was up only 1 percent in the QSR due to unbundling costs. He said bakeries had managed to turn around with revenues and volumes now matching levels of two years ago. At the AGM, director fees were approved at $531 954 up from $489 679 last year while Auditors fees were approved at $168 649.
