IOL - BUSINESS REPORT / 28 FEBRUARY 2020 - 20.20 / EDWARD WEST
CAPE TOWN – Spur Corporation is on the lookout to acquire brands with good growth prospects after reporting a strong 35.6 percent rise in diluted headline earnings per share to 124.9 cents in the six months to December 31.
Chief executive Pierre van Tonder said yesterday that although earnings were helped by the reversal of some impairments of previous years, the group was excited to be able to report this kind of growth in the weak South African economic environment.
Rocomamas is the newest brand in the Spur group and is showing the fastest store growth. Photo: Supplied
He said online sales had become a big part of the business in South Africa and despite the additional costs associated with online sales, “we have to give customers what they want”.
It was a good time to be looking for sustainable acquisitions as the market had become “highly competitive” while the trading environment was “squeezed”, Van Tonder said.
Twenty-two outlets had opened over the period, growing the restaurant base to 642.
This included six restaurants in Mauritius and three in Zambia, growing the group's presence in those countries to 18 and 16 outlets respectively.
Over the next six months another 17 restaurants would be opened outside of South Africa, “with international expansion focusing mainly on Africa and the Middle East”. Six new restaurants are planned for Zambia, three in Saudi Arabia (Riyadh), two each in Nigeria, Kenya and eSwatini and one each in Zimbabwe and Ghana.
In South Africa 11 new outlets were planned. Middle-income consumers came under increasing financial strain.
Pre-tax profit grew 19.5 percent to R161.8m, boosted by an impairment provision of R10.8m related to its black economic empowerment transaction with Grand Parade Investments, which ended in October 2019.
Headline earnings grew 29 percent to R113.5m. Interim dividend lifted by 23.8 percent to 78 cents per share.
Van Tonder said total franchised restaurant sales across the local and international operations increased 4.5 percent to R4.1 billion.
The flagship Spur Steak Ranches brand increased restaurant sales by 4.5 percent and gained market share. Spur's design and décor had been revamped, and a new menu catered for all taste profiles.
RocoMamas grew sales by 6.4 percent. John Dory’s lifted restaurant sales 6.6 percent and Panarottis and Casa Bella increased sales by 1.5 percent, impacted by aggressive discounting in the takeaway pizza market. The Hussar Grill’s higher income customers pushed sales up 9.2 percent.
International sales increased 4.1 percent. Restaurant turnover for the Africa and Middle East operations, which accounts for 82.3 percent of international turnover, increased by 9.6 percent.
Poor trading conditions and the closure of a net two restaurants contributed to sales in Australia and New Zealand falling by 20.3 percent. Van Tonder said a master-franchise agreement had been put in place in New Zealand and a similar agreement was being reached in Australia. This should result in an improved performance from the two countries, he added.
Trading in the first two months of the second half was evolving in much the same growth rates as in the first half.
Spur shares closed 1.02 percent lower at R24.25 on the JSE on Wednesday.
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