Famous Brands reveals solid earnings growth

Following a two-year acquisition drive, Famous Brands focused on consolidating and integrating its new businesses in 2011, a programme which resulted in improvements in revenue and profitability of the franchising and supply chain divisions.

For the year ended February, Group headline earnings per share (HEPS) and earnings per share (EPS) both increased by 15% to 278 cents per share.
Group revenue and operating profit grew by 15% to R2.16-billion (2011: R1.88-billion) and R413-million (2011: R358-million) respectively. The operating margin remained steady at the record level of 19.1% achieved in the prior comparative period.

Famous Brands’ total franchise network comprises 2042 restaurants worldwide and its portfolio includes Steers, Wimpy, Debonairs Pizza, FishAways, Mugg & Bean, tashas, House of Coffees, Brazilian Café and Blacksteer.

Looking to the future

The Group predicts that consumer disposable income will remain pressured by escalating electricity tariffs, fuel costs and general food inflation.

CEO Kevin Hedderwick comments: “The bulk of consumers in payment arrears are middle-class earners, the traditional target market for food services operators. To entice them to resume previous levels of spending will demand intensified innovation, particularly should interest rates increase and economic uncertainty persist.”

“Despite the negative effect which these factors will have on the industry, the Group’s all-encompassing business model, exceptional personnel and best-in-class leisure brands position Famous Brands for continued growth,” he says.

Hedderwick concludes: “To achieve our audacious growth ambitions, the Group will undertake a range of initiatives in the period ahead aimed at unlocking further value for shareholders. This will include centralising our procurement function enabling Famous Brands to become an even lower cost producer; extending the Group’s presence in market segments where it currently has no representation, including identifying new joint venture partnerships; and continuing to explore opportunities to leverage the synergies afforded by Famous Brands’ supply chain.”