LEADING fast foods outlet company, Simbisa Brands has bemoaned the impact of inflation and tough tax measures impact on operating margins in the just-ended financial year.
Presenting the group's results for the year ended June 30 2024, Simbisa CEO, Basil Dioniso said conditions emanating in the second half of the year were not so favourable for the unit.
"Operating margins came under significant pressure during the financial period under review, stemming from sustained high inflation, rising utility costs, ongoing power outages and exchange rate disparities.
"A drought year pushed up raw material prices, and a nationwide potato shortage in Q3 resulted in difficulties securing consistent supply of quality potatoes and a doubling in the potato price during this period. Improving supply chain efficiencies has therefore become a key focus."
The group acknowledged that although inflationary pressures and exchange rate disparities remain a key challenge in Zimbabwe, there were periods of reprieve over the financial period under review, during which inflation and exchange rates held steady; both in the lead-up to the August 2023 elections and following the introduction of the ZWG in April 2024.
"The new tax measures which took effect from 01 January 2024 contributed to pressure on operating costs and consumer disposable incomes, although the effect on the latter was cushioned by the high level of informalisation of the economy," he said.
During the period, the Zimbabwe operations achieved revenue growth of 6% in FY 2024 versus the prior year, driven by a 4% increase in Average Spend and a marginal 2% growth in customer counts, a reflection of the subdued consumer activity within the market.
Intensified efforts were made in the second half of the year to increase customer footfall into our shops; the results have been encouraging, with customer counts in 2H exceeding those achieved in 1H, which is a traditionally busier period.
During the 12-month review period, a net of 52 new counters were opened in Zimbabwe, with 6 new counters opened in the final quarter. As of 30 June 2024, there were 332 counters trading in Zimbabwe.
